Bidding Strategies to Win at an Auction (Investment Property)

FareEvader on 10/09/2019 - 15:52
Last edited 10/09/2019 - 16:24

Greetings,

I'm looking at buying an investment property next week and seeking your advice on any tips/strategies to win at a public auction

I've been to many auctions before and I've seen different strategies, such as:
- Constantly bidding from the get-go
- Last minute sniper bid
- Big bids (e.g if the bidding is going up by $5K but one offers $10K)
- Wearing a lot of designer clothing/arriving in an Aston Martin

Thank you in advance!

Edit: Yes, I have the funds plus a bit more available to buy the property at the asking price.
Edit 2: I would like to win but I am happy to walk away if the property is too expensive, so "outbidding everyone" isn't a very good strategy considering rental yield…

Financial

Comments

  • bobbified on 10/09/2019 - 15:54
    +5

    …tips/strategies to win at a public auction

    1. Go in with a big bank account. It never fails.
    2. Read number 1 above.

    Wearing a lot of designer clothing/arriving in an Aston Martin

    Without (1) above to back you up, you will just look like a tosser.

    • kahn on 10/09/2019 - 16:00
      +2

      This is pretty much the only thing that matters. If you are willing to spend more than other bidders, then you will "win". The little strategies that the OP mentions are just for show.

      I've been to many auctions before

      I can't stand those people. People who go only to watch. As if it's some sort of entertainment.

    • FareEvader on 10/09/2019 - 16:04

      I'd obviously prefer to buy it for as little as possible so outbidding everyone is not a real strategy considering rental yield.

      • bobbified on 10/09/2019 - 16:17

        …outbidding everyone is not a real strategy

        Outbidding everyone is how you win an auction. How else can you win?

        You could perhaps get someone to go around before the auction and tell everyone that a whole family was murdered in the house recently. That might scare a few people away! Lol. I've heard about how some potential buyers used to go around bad mouthing (for example, saying out loud that tens of thousands need to be spent on repairs before being able to move in, etc) the house to scare potential buyers.

        • FareEvader on 10/09/2019 - 16:25
          -1

          This is actually a really good idea, thanks!

  • neo on 10/09/2019 - 15:59
    +2

    Win it before the auction. If you're serious about it, put in an offer (if possible)?

    • funnysht on 10/09/2019 - 16:06

      i know someone who did this and got the offer..but wouldnt just agents then increase their reserve price to that price.

      • HighAndDry on 10/09/2019 - 16:09

        What you're supposed to do, is if the price guide is $X - $Y, and you put in a offer of say, $Y, that gets rejected, you ask the agent to up their price guide hopefully knocking out other bidders. Especially with the current focus on under-quoting, of an offer of $Y has been rejected, that's obviously now the low-end of the genuine price range.

    • FareEvader on 10/09/2019 - 16:07
      +1

      I tried but the real estate agent said that their client wants to go to auction

  • Typical16-bitEnjoyer on 10/09/2019 - 16:03
    +4

    your advice on any tips/strategies to win at a public auction

    Make the highest bid. Simple.

    • FareEvader on 10/09/2019 - 16:07
      -8

      Outbidding everyone is not a good strategy considering rental yield

      • Typical16-bitEnjoyer on 10/09/2019 - 16:22
        +4

        You asked how to win. That's how you win.

        If it's not a good financial decision to win, then don't win it?

        P.S. I didn't neg you.

      • DashCam AKA Rolts on 10/09/2019 - 17:13

        Outbidding the other bidders is the only way to actually purchase the property at auction; there is no plan B here if the vendor is insisting on going to auction.

      • jacross on 11/09/2019 - 08:08

        You keep saying that like it's some secret sauce.

  • tsunamisurfer on 10/09/2019 - 16:03
    +4

    The best strategy is to know the market in which you are buying, know your upper limits and know when to walk away.

    What you want is to win the auction, which is very very easy.

    What I tell people is to win value at the auction, that is harder.

  • Archi on 10/09/2019 - 16:04
    +3

    body language is important.
    - have a confident stance
    - speak clearly and loudly
    - don't hesitate when offering the bid.
    - offer counter bids immediately after others,

  • funnysht on 10/09/2019 - 16:05
    -1

    pro tip: don't go there dressed up as bigbird

    • kahn on 10/09/2019 - 16:19
      +2

      Clever people go to auctions dressed as The Count. "I bid $800,000. Ha. Ha. Ha."

      • Archi on 11/09/2019 - 15:57

        HA HA HA I read that with the accent

  • sempro on 10/09/2019 - 16:06

    the trick is not to lose….

  • weezlebub on 10/09/2019 - 16:12
    +1

    It's a really big purchase, my personal experience / advice is to go to a lot of auctions with a price in mind … what you would be happy to pay (which is, of course, below market value) …

    Then put a bid in 'if' it's what you're willing to pay …

    I got very lucky, checked out a house a couple of times, went to the auction and it was passed in (no bids), they came to me afterwards and asked what I was willing to pay, I offered $370k (council valuation on land was $400k and from a few years earlier), they refused to accept it, but called me back a few days later and said the vendor had accepted … I also insisted on a 'subject to building inspection' clause because they hadn't declared asbestos and a friend who came with me said that it was … asbestos on building inspection so they asked me to get quotes to remove the asbestos, obtained 3 quotes and dropped the price by a further $15k …

    So council valuation on the land was $400k, bought the place for $355k

  • kahn on 10/09/2019 - 16:14
    +1

    Another pro tip: hire bikies and know how to use them.

    Step 1: make the first bid
    Step 2: someone makes a higher bid
    Step 3: indicate to one of the bikies to approach that bidder and arrange for an "accident"
    Step 4: make another bid

    Repeat as many times as necessary.

    • orangetrain on 11/09/2019 - 08:47

      Auctioneer: "Wow, so many accidents happened here during auction. Unlucky… the winner is Johnny N as the only person alive."

  • Bargaitbuggs on 10/09/2019 - 16:17
    +1

    Just boss that shit don't let that place get away.
    Must be a high demand area ?
    How long has the place been on the market?
    Fake bidders?
    Real estate agents nothing real about em

  • Seraphin7 on 10/09/2019 - 16:21
    +6

    All these strategies work … until you come up against someone who's prepared to pay more than you.

  • [Deactivated] on 10/09/2019 - 16:32
    +3

    Tips:

    1. Show moderate amount of interest - ie. You may big if the price is right. This dissuades the auctioneer to place "vendor bids" (absolute BS if you ask me).
    2. Don't bid until the vendor is happy to put it on market, ie. If you win, it's sold. No winning the right to first negotiation.
    3. Once the property is on the market, be aggressive. Offer above minimum increment if the response time is slow. This sends a message that you're going to outbid anyone else. Overbidding by $5k is much better than having a few more back and forths.
    4. Arriving in an expensive car is a good idea but it can backfire. If you rock up in an anything but the top end latest model, I take it you have a budget. There's a big difference between a Aston Martin Vantage and a DB11. Vantage tells me you like nice things and have some disposable income. DB11 tells me you buy whatever you want.

    At auctions, someone driving a Camry is a bigger enigma than one in a Carrera.

    • donbot on 10/09/2019 - 17:36
      +1

      This, and particularly point 2. Keep your powder dry until you know its on the market.

    • elgrande on 10/09/2019 - 23:00
      +2

      I've won auctions in a camry - need something reliable or you may not make it to the auction!

    • Ozpit on 11/09/2019 - 09:39

      An even bigger enigma than arriving in a Camry, is arriving on a pogo stick.

    • [Deactivated] on 12/09/2019 - 16:38

      So, buy a DB11 to make sure you pay a reasonable price for the house?

      • [Deactivated] on 12/09/2019 - 16:40
        +1

        Or rock up with a 15 year old Camry and look like someone who doesn't need to impress anyone.

  • funnysht on 10/09/2019 - 16:34

    The question really should be
    ?When would your competitor not place a bid?

    When the other guy bidding is a bikie or has a bikie friend near by.

    hint hint

  • JimB on 10/09/2019 - 16:45

    I honestly don't think there is a strategy to win.

    I don't care if the person I'm bidding against looks like a Bum or drives a Ferrari 250 GTO.

    Whoever is willing to pay the highest price will win at the end of the day.

    The only tip I can give is don't bid against the vendor (auctioneer).

  • JimmyF on 10/09/2019 - 16:50

    Bidding Strategies

    Don't bid, wait till its passed in and then make an offer.

  • hoey888 on 10/09/2019 - 17:01
    +1

    Don't be one of those people… "If only I had bought the property at xxx,xxx. Its now worth x,xxx,xxx "

    What might be expensive now might not be expensive 5-10 years down the track. Looking back is very easy in hindsight.

    Buy what you can afford and comfortably repay. No point over extending yourself if you are forced to sell in future.

    • PlasticSpaceman on 11/09/2019 - 08:21

      +1 from me. Work out the max you can/want to pay, and stick with that. On the day, strategies vary depending on the bidders. If you are the only one interested, then negotiate after it is passed in with no bids. If it is passed in with you as the highest bidder, when you go into negotiations keep in mind you can start by offering less than your last bid. Don't be part of a bidding war. Use knock out bids if appropriate….

  • myusername on 10/09/2019 - 17:21

    have more money than anyone else

  • slow on 10/09/2019 - 17:30

    Look bored like you don't care, and annoyed when anyone else bids. Well that is what i did

  • [Deactivated] on 10/09/2019 - 18:18

    These strategies may not work. Only been to one auction, in which a dude raised the bid (was going up $1k or so) by some $40k. Then everyone stopped breathing and the guy's bid was the highest. The auctioneer went inside the house and 'consulted' the owner, came back with the reserve price now set even higher than the max bid. So, everyone started again. From memory it went up another $50k or so until that dude drove everyone to limits and won.

    Estimated price $450k or so (hence why I went there). Starting bid in the $400ks. Sold at $520k-30k from memory.

  • brad1-8tsi on 11/09/2019 - 08:27
    +2

    My RE friend (so they didn't have a vested interest in my purchase) told me not to bid until the property was on the market and then come in with a killer bid or two.

    I did both, sat back and let others show their enthusiasm and bidding slowed down to $500-$1000 increments until it was called as "on market" and then I put in a bid with a $5k increase which really annoyed the auctioneer for some reason (he had a big whinge about me coming in late, so I offered to withdraw my bid). The $500 increment bidder dropped out immediately and the the other bidder added $1k. I added $5k and the place was mine.

    There were 16 actual bidders for that place as the price estimate by the RE was really low and people thought they would get a bargain. That strategy probably wouldn't work with an auction where there were only a few bidders.

    • FareEvader on 11/09/2019 - 09:11

      Cheers, I think this is a good strategy!

    • Typical16-bitEnjoyer on 11/09/2019 - 09:47
      +1

      which really annoyed the auctioneer for some reason (he had a big whinge about me coming in late, so I offered to withdraw my bid).

      What a crappy auctioneer lol. Must have had a lunch appointment to get to and wanted to wrap things up.

      • brad1-8tsi on 11/09/2019 - 10:12
        +1

        I think it was because I was on the other side of the room and he had to turn his head on his fat neck to see me. Either that or dinner. It was one of those evening Auctions with 18 houses on the list.

        A very poorly marketed property. We had been looking every weekend for 12 months. We knew what the market was and that this was a $600k house. The RE was telling everyone it would be mid-$300k. She didn't change that advice even after we did a pre-auction offer of $480k that was declined. There were so many badly informed bidders at the auction thinking they'd get the place for mid-$400s. A few that had done their homework. We got it for $568k. It was a bargain.

  • Ozbfy on 11/09/2019 - 08:41
    +3

    My view is that an auction is designed to play on people’s emotions.

    They want an excited atmosphere with a lot of bidders so people keep pushing the prices up into irrational levels. Therefore I like to do the exact opposite and wait until the end.

    Anything I can do to cool down the auction speed is important to me. Of course as people said, deep pockets make the biggest difference haha.

  • 12Sydney34 on 11/09/2019 - 08:56
    +1

    Watch out for fake bidders…
    Working for the seller

    • FareEvader on 11/09/2019 - 09:07

      How does one spot a fake bidder?

      • Typical16-bitEnjoyer on 11/09/2019 - 09:45
        -5

        Easy. They are the ones fake bidding.

      • 12Sydney34 on 12/09/2019 - 09:06

        No foolproof method… sometimes by chance…
        Watch interested parties demeanour, dress code, single person vs couple vs family fit for purpose against the property on auction…
        How they bid at auction…

        If there are more than 2 interested parties, less likely to have fake bidders..
        But if you are the only one, then anything can happen..

  • gyrex on 11/09/2019 - 11:10

    The best strategy would be to hold the cash and wait for the impending recession to buy properties at a sizeable discount.

    • Colombian on 11/09/2019 - 12:04

      Recession that is coming since 5 years ago?

  • weezlebub on 11/09/2019 - 11:34

    one that others may not have mentioned, put in a formal offer at the price you want to pay, before the auction

  • Some Guy on 12/09/2019 - 16:39

    Just prior to and during the auction, have some friends in the neighbouring yards drinking/yelling/fighting/praying/fixing a harley/bathing a pit bull and so forth. Be sure they loudly say things like "Yes Salim, this would be an excellent street for a wedding" or whatever it is a houso would say.

    Then stop bidding when the vendor starts.

    • [Deactivated] on 15/09/2019 - 19:30

      Lol

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