Steve Koerber's Old Blog

Remuera's house sold name since 1998 – 021864166

Tips for buying at auction

Posted by Steve Koerber on September 23, 2009

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Many New Zealander’s seem to be intimidated by the auction process and it’s easy to understand why.  Auctions are very exciting events.  I’ve been in real estate for 13 years and I still get that surge of adrenaline when I bid on a property myself.

But if you avoid auctions because you’re uncomfortable with the process you’re going to miss a lot of good buying opportunities.  It’s usually the best properties that are offered for sale via auction, particularly in Auckland where a culture of auctions is ingrained.

All that said many buyers still perceive them as highly stressful events that lead to spur-of-the-moment decisions based on emotions rather than sensibility.

This only happens when people are unprepared.  Many people forget that pretty much all of the tough choices, such as determining your maximum price, can be pre-planned – thereby reducing the auction itself to merely a forum for executing decisions already made.

Preparing to buy via auction

You can authorise someone else to bid on your behalf.  Choose someone you trust who has auction experience, or even hire a buyer’s agent. 

Alternatively, get ready to do the bidding yourself, if you’re prepared and clued up, it can be great fun and yield a great result – here’s how.

Prior to the event

  • Use your research and budget to help you identify a ‘walk-away’ price.   It’s in your interest to keep this a secret from the agent, so they don’t use this information to help the vendor set their reserve.
  • Have your finance already in place and attend the auction ready to write a deposit cheque.
  • Attend some auctions beforehand to experience the atmosphere and observe different bidding strategies.
  • Organise any amendments to the contract, such as a longer settlement period, prior to the auction.  Talk to the agent and get agreement from the vendors in writing.

On the day

  • If you’re going to start the bidding, start low.
  • Project confidence – make the other bidders think you have no limit.
  • Make your bids fast and assertive. Agonising over your next bid is a sign of weakness.
  • Call out your offer in full (i.e. say “$350,000” instead of the increments, i.e “$5,000”).
  • If it’s going to pass in, make sure you are the highest bidder, as this allows first right to pay the reserve price.
  • Stick to your ‘walk-away’ price. It’s better to feel the short-lived disappointment of missing out on a property you love than the long-lasting remorse of paying too much.

Fate can play a hand in these things. If you miss a property at auction, accept that it wasn’t meant to be and look forward to finding something better soon.

Thanks to John McGrath for providing the framework for these tips.  Good luck and enjoy the ride!

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3 Responses to “Tips for buying at auction”

  1. […] reading these posts Sir Edmund Hillary's Home SOLDTips for buying at auction1929 Stock Market Crash ChartAuckland residential property prices have doubled every nine years […]

  2. Rob said

    Auctions stink – they waste your time. I have cash and never have been able to buy at auction yet. The foreign contingent always pay over the top for what is not worth it. Who has ever heard of doing business in an environment where you spend the entire morning waiting for the listing to come up and it goes to one person – leaving you to have to go to another auction only to find the same outcome.

    • Thanks Rob, people selling by auction need people like you. Yes it’s frustrating, but I say if you want a good home you’re probably going to have to fight for it. The better it is, the more will want it. You must have good taste if you keep missing out on auctions. You’ll get one eventually.

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