Purchasing a property is a big decision and can often be quite daunting. Auctions play a major role in how properties are sold in Australia so it is important to feel comfortable about bidding at auction. If you don’t feel confident in bidding, your agent or perhaps a friend or relative can convey these bids for you as long as the relevant paperwork has been completed prior to the auction starting. Here are some tips that will help you in determining a bidding strategy.
- Don't Strategise too much: Each and every auction is different. Don't try to guess how the bidding will unfold, focus on your task at hand – purchasing the property. If you really want the property, be the first to bid. Approximately 70% of people who open the bidding end up buying the property.
- Bid with confidence: Don't sit back and wait. If you bid with confidence and without hesitation you will show the competition that you want the property at any cost, and money isn't an object (even though we all know it really is). This has you setting the pace, rather than chasing the race.
- Set a base limit: set a limit that has flexibility. Don't allow yourself to miss out on your dream home for $1,000 or $10,000, you just don't know if the other bidder is at their limit too. In the whole scheme of things, work out the percentage of going over your limit by this amount – it really is insignificant in the long run.
- Don't forget your Identification: by law you must have ID to register for all auctions in QLD. A driver's license is the easiest way. You can speak to the agent about registering prior to the day of auction.
- If a property is passed in: Many auctions facilitated have conditional buyers (buyers that can't bid under auction terms and conditions) waiting hoping that a property passes in. Should the property pass in, everyone will have equal opportunity to submit their offer. The Auction process is the most transparent way to buy and in most cases, with less competition. Due to the “cash” sale, this might be more attractive to the sellers than selling after an auction, so sometimes you might get it cheaper than you thought.
- What is a vendor bid: In QLD the auctioneer can make vendor (seller) bids, up to but not equal to the reserve. Once the reserve is met, any vendor bid is then deemed a false bid, and a false bid is illegal. A vendor bid must be announced publicly by the auctioneer.
- Why would and agent or auctioneer ask you to increase your own bid: At some point in the auction, the auctioneer may ask you to increase your current bid. Your bid may not be at a price the vendor will accept, therefore it may need to be increased if you wish to purchase the property.
It's illegal for a seller or their agent to give you a price guide for an auction property. This is because they cannot know how high the bidding will go. Here is some government information for buying at auction in QLD.