Auction Bidding

I read an article in the Sunday Telegraph on the weekend which featured a property up for auction that was riddled with termites. The story called “$800,000 for Sydney termite 'dump' with no floor” went on to describe how buyers got carried away with the bidding process to purchase this so called ‘renovators delight’ which is currently in an unliveable state.

Welcome to my final installment in this series of Auction articles. Over the last month you should have developed a more comprehensive understanding of the auction process. To finish it off, let's take a look at how to prepare a good strategy for auction day. Here are my top seven tips:

Observing and understanding the often subconscious, psychological factors that influence bidding is part of my business. It helps me to get the best deals at auctions for my clients. The psychology of auctions is absolutely fascinating and it's something that all bidders should be aware of before auction day. Why? I hear you ask. It's because auctions are highly emotional environments where a bidder's focus, reason and common sense can easily be lost momentarily costing them thousands.

Before you can even start thinking about buying well at auction you need to take some time to fully understand what the auction process actually involves. Put simply, a property auction is a public sale by a licensed auctioneer where the property is sold to the highest bidder, providing the reserve price is met.

An auction takes place under unique fair trade and legal conditions when compared to a private treaty sale. These conditions vary across Australia and it is advisable to check the rules that apply in your state or territory by contacting your local Office of Fair Trading.

The article in the SMH on May 24 called ‘Emotion runs high as an era ends’ shows just how easy it is for bidders to get carried away with the auction day hype. The article says the successful buyers bid $35,000 dollars above their pre-auction maximum bid price to purchase the property as a relative spurred them on to keep bidding. I hear this type of story all the time and stress again and again how important it is for prospective buyers to set a maximum bid price based on research and stick to it.