Tuesday 05 September 2017
House hunting can be a time of anxiety and stress - and that’s before you’ve even asked the bank for a home loan. But nothing gets your heart racing and your palms sweating more than auction day. Regardless of how you handle your nerves, having a successful auction day will come down to clever tactics and the right budget. If you’re heading out to an auction soon, here are a few tried and tested ways to beat the competition.
Show up in a suit.
We’re not kidding. It’s all about creating the illusion that you mean business. By suiting up for an auction, you’re subtly letting other bidders know that you’re serious about the property and that this isn’t your first auction (even if it really is). Another clever tactic to put the fear of God into other bidders, is wearing a dark pair of sunglasses so that no one can make direct eye contact with you and see that you’re just as nervous as they are!
However, confidence is key so if you’re willing to set the tone from the first time you call out a counter bid, stare directly at the person you’ve made the bid against to make them sweat.
Stand near the front.
This is another sly way to show bidders you’re prepared and serious. By standing near the front, not only will you be closer to the auctioneer, you’ll be able to see your competition more clearly.
Mozo’s Property Expert, Steve Jovcevski calls this the ‘shock and awe’ technique, as bidders who choose to stand at the front will also attempt to bid from the beginning right up until the final call. He says that by doing this other bidders give up early because there’s no sign of stopping.
But if being front and centre really isn’t really your thing, another tactic worth mentioning is practising the art of silence. Steve has also noticed ‘silent bidders’ who wait until the final call before making their knockout bid, or instead starting with their largest bid from the get go and then waiting for a reaction.
Just make sure you don’t stand too close to the front, otherwise you run the risk of looking desperate and overly keen.
Use a funny numbers game.
Throwing off your competitors is one of the best ways to stay one step ahead of the game. Rather than sticking to even numbers with your bidding, trying calling out a couple of random, uneven figures to confuse other bidders. For example, instead of raising the bid to $761,000, raise it to $761,345. Be sure to have these numbers written down before the auction begins, or you could just end up confusing yourself!
Do your homework and then do it again.
The only way you’re going to learn how auctions go down is by attending them again and again and again. The trick is to attend enough until you could hypothetically host your own. Eventually, you’ll pick up on patterns, different behaviours and terms used at auctions and be able to act accordingly when your dream property is up on the block.
Ask a question for the hell of it.
It’s best to do this before the auction begins and to make sure other bidders hear you ask the question. For example, ‘Has the Body Corporate raised any special levies?’ is a question other bidders may be too afraid to ask. This will not only draw attention to yourself, it’ll prove that you’re a bidder who’s not afraid to speak up.
The 'never-ending' budget impression.
Now with this next tip, do not take it literally, you need to stick to your budget and know when to walk away at an auction. All you need to do is give the impression that you’re cashed up, which will come from clever tactics, such as keeping quiet until the third call, before coming back with a stronger bid. While this may appear annoying to other bidders, again, you’ll draw attention to yourself and also stir up some tension.
Speak loudly with good posture.
When it comes to succeeding at an auction, confidence matters. You’ll need to stand tall and maintain positive body language all throughout. Another thing to keep in mind is your voice, each time you make a bid, speak loudly and clearly with no hesitation. People need to be able to hear you in order to take you seriously. You can also get this message across by calling out bids in full amounts. For example, rather than simply saying ‘$1,000’ to raise the bid, call out ‘$701,000’ instead.
Get someone else to bid for you.
It’s okay if you find the heat of auction day to be overwhelming so it might be a good idea to call in the help of a friendly or professional buyers agent. You’ll obviously need to discuss your budget beforehand along with the maximum price you are willing to pay on a property, but because they won’t have the emotional attachment, they will be able to project confidence to other bidders and hopefully get you the home!
Mozo's auction prep list:
Now that you’ve got your tactics down, here are a few things you’ll need to do to prepare for the big day:
Get loan pre-approval - In order to bid with confidence, you’ll need to have the bank on your side. That’s why it’s important to have your home loan pre-approved before the auction. A pre-approval certificate is valued for between 3-6 months, so you won’t need to get this for every auction. But you need to be aware that most pre-approvals are conditional. This means the bank doesn’t value the property until after the auction, so should you pay over the market value you may not get the final approval for the full loan amount and you’ll need to get the extra funds to cover the difference elsewhere.
When getting pre-approved, it’s also incredibly important for buyers to take the time to shop around on their home loan in order to get the best deal and interest rate available.
Register to bid - In order to bid at an auction, you will need to register beforehand with the selling agent. You’ll need to present your driver’s license along with your vehicle registration number. If you don’t have a license or permit, you’ll need to provide two other pieces of documentation that show your name and address.
Get your deposit ready - Before you start crossing your fingers and toes, hoping to score the property of your dreams, you’ll need to have your finances ready to go. If you are successful at the auction, you’ll need to have a 10% deposit ready - so don’t forget your chequebook!
If you don’t have a personal chequebook, you’ll have to pre-organise a bank cheque with 10% of your maximum sale price before the auction. By doing this, there is a chance that your bank cheque may be higher than 10% of your winning bid, if this is the case it means that you’ll have more money already invested into the home.
Inspect the property - Although you will need to pay a fee for this, having a building inspection conducted by a third party in advance is a good idea, long term. The inspection will inform you of any structural damages with the property, like water damage or termites, that may cost you down the track.
Re-check the paperwork - It’s always better to be safe than sorry when buying a property so make sure to review the contract before attending the auction. It’s a good idea to have the contract looked over by a solicitor or conveyancer as the contract will contain details on the property itself, which could be harbouring potential issues that can haunt you later on.Home loan tips