The most essential skill of any bidder at a property auction is knowing when it’s time to stop.
When the price reaches a level that no longer represents value to you, it’s time to call it a day. Sometimes auctions make property dreams come true, other times they are simply a superb training ground.
There are only three possible auction outcomes. The property will either sell under the hammer because the bidding has reached the vendor’s reserve, the property will be passed in and the highest bidder will have the opportunity to strike a deal via negotiation, or the property will become available to the open market for a specific price (usually the vendor’s reserve or a price a fraction above reserve).
Stay focused
It’s important for any bidder who is serious about buying a property at auction to ensure that they bid within their limit regardless of whether they are bidding against other buyers or against an auctioneer’s vendor bid.
A buyer who gains the right to negotiate exclusively with the vendor at their reserve price often holds the advantage. Vendors are not only emotionally entrenched in the sales campaign, but they want the ‘Sold’ sign to go up on that board before the auctioneer has to head off to the next auction.
Vendor motivation to sell is at an all time high on auction day.
Knowing when to throw in the towel is key when bidding at auction. Picture: realestate.com.au
Buyers need to negotiate with respect and pragmatism, offending the vendor will never play out well and agents will revert to an advertised private sale if negotiations stall.
Just because the property is passed in doesn’t mean that the vendor will part with it at a low price. Keeping an eye on the prize and not missing the opportunity to buy at a fair price is vital.
Cate provides opinions based on current market conditions. These opinions should not be treated as investment advice. Always obtain advice based on your individual circumstances.
