Auctions can be high-pressure situations for buyers, particularly those unfamiliar with the process.
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Therefore, Daniel Hastings, director of residential sales and head auctioneer at MMJ Wollongong has offered some tips for bidders.
Mr Hastings has worked as an auctioneer for 15 years.
Check out other auctions
Mr Hastings suggests going to watch a few other auctions as an observer before participating as a buyer.
“If you can’t get to one live, there's plenty of footage on YouTube of auctions, so do some homework,” he said.
Don't be intimidated
Mr Hastings said there are always people who have feelings of trepidation about going to an auction, or even considering a property that’s going to auction.
“It’s a natural fear I think, but in saying that probably in the past decade our region’s probably become a little more familiar with the process,” he said.
“That it’s transparent is in some ways a great thing, but that can also be an intimidating thing.
“I try and say to people though that like every sale, not every auction goes gang-busters. Some are weaker than others and sometimes people not keeping an open mind about attending an auction or partaking in an auction can be to their detriment.”
Be organised
Mr Hastings suggests making sure you're familiar with the terms of the contract of sale, and being comfortable with the property's condition. “Most agents will provide a building inspection report for their auctions these days, so make sure that's available,” he said.
A comfortable budget
“Make sure you set an absolute top figure where you're not going to kick yourself if you miss out,” he said.
“If you set that budget, try and bid with confidence to that point so that you're asserting your position.
“You also need to make sure your finance is in order, because if that hammer falls, it's a sale even before you sign a contract. Therefore you're liable for ten per cent if you end up in a situation where you can't settle the sale.”
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Ben Mitchell, LJ Hooker’s head of network development for Australasia has conducted in excess of 6500 auctions during his career.
In 2009, Mr Mitchell formed his own company ‘Sold Buy Auction’.
He said there are three common mistakes creeping into their auctions in the current environment:
Failure to start the bidding
The homework is done and the property selected, but there is a hesitation among the buyers to put their purchasing position forward in the fear that they are going to pay too much.
“My advice is start the bidding strong at a reasonable (amount) within the price range of the property value,” Mr Mitchell said.
“This will do a couple of things. One, stamp your mark on the property, letting the competition know you are serious, and two, not (allow) the bargain hunting competition to enter and create momentum.”
Getting caught up in smaller increments
Often buyers may try to slow the bidding down by offering smaller amounts; i.e. $1000.
Mr Mitchell said this can be risky for a number of reasons, as it invites more competition into the bidding due to this smaller amount.
“And it’s easier for the bidding to run on as it doesn’t feel like there is much being spent each time.
“Keep the increments as high as you can to give the impression you have endless amounts of money; this is a game of perception.
“You need to win that battle (while) staying within your budget.
“If you are well within your budget and put a smaller bid in you just invite the competition back in with a smaller amount, which could ultimately cost you.”
Hesitation
He said this is the top reason for loss at an auction.
“The moment a bidder pauses to bid without a strong voice while in a good price increment, is the moment the competition is invited back into the game.
“Be confident and prominent. Many people have won at auction even though the competition have had greater capacity, but are scared off by your forward actions.”