The Block Triple Threat buyer’s advocate Nicole Jacobs, shares her five top tips to buying at auction…
Even as a seasoned professional, an auction brings butterflies to my stomach, and I love that feeling. It keeps me alert and ready for the auction. Harnessing this energy positively is one of your keys to a successful outcome.
1. Pre-auction homework
Before the auction, you will need to have had the Contract of Sale looked at by a solicitor or conveyancer to make sure all questions have been answered. You will have your finance sorted (know your limit) and you will have done your homework on the area (recent sales of similar properties) and attended several auctions so you know the process.
2. Is it a referral or non-referral auction?
Know the difference, know the signs and ask the question. This is something you need to know.
A non-referral auction means the auctioneer will not break for a ‘quick chat with my vendors’. Once he/she has reached the vendor’s reserve price they will keep going until the last bid is offered, count it down three times and sell it under the hammer. If you were waiting for the half-time during this auction, you could be leaving without even putting your hand up.
A referral auction can play out two ways. The auctioneer will break when the bidding slows to a halt and ‘refer to their vendor/s’, come back and either declare the property ‘on the market’ or say ‘we are very close’ or something to that effect. They will continue and hope that the reserve price is met and keep going while the bidding keeps coming. Often, one of the agents assisting will go inside and come back out and give a nod of ‘it’s on the market’ to the auctioneer and they will knock it down three times when the bidding has stopped.
If throughout either of these processes you are confused, don’t be afraid to ask the question ‘Is the property on the market?’. If nothing else, it will slow proceedings and allow you to think if the pace has been faster than you can calculate!
3. Stand in a prominent position where you can see the whole crowd and the auctioneer
Positioning yourself well at an auction is crucial. You need to see where the bids are coming from so you can watch their body language and you also need to be in clear view of the auctioneer.
Body language is an amazing human trait, especially at an auction. A couple that start to shake their heads or discuss whether they can go up another $1,000 has clearly not come to the auction with a firm limit and an auction strategy.
4. Bid and bid with confidence
An auction where no one bids is crazy. If the property passes in on a vendor bid, then a ‘behind the doors’ auction goes on and then you have no idea if there is actually another bidder at all.
If it is going to pass in, then let it pass in to you. You will then have the right to hear the vendor’s reserve price that you will either be happy to pay, or be able to negotiate for a good 15 minutes while everyone else is outside wishing they were you.
Every auction is different. Whether you come in at the start, halfway through or at the end, you need to bid with confidence. If you know your prices, then a strong first bid can often knock out half the competition right there and then. While many auctions have been won on a bid of just $1,000, it is often not the strongest tactic to employ, going up in $1,000 lots.
5. Don’t end on a round number
Try not to have a finish limit that is a round number. Sometimes this is because the bank or finance broker has said ‘you can go to $1,200,000’. If you have a limit of, for example $1,205,000, you may just be able to put in your additional $5,000 strong bid at the end and win the auction.
–Nicole Jacobs is a member of the buyers’ jury on The Block Triple Threat and director of Jacobs Buyers Advocates in Brighton, Melbourne. She has worked in real estate for more than 15 years.