What To Expect At Your First Auction

If you’re in the market to buy a property, you’re probably very pleased about the return to ‘in person’ Auctions. However if you’ve just started out, your very first Auction can be quite a confronting and overwhelming experience. So before you think about actually bidding at an Auction it’s a good idea to attend a few as a spectator so you know what you’re in for. There are a few things you should look out for, but most importantly you want to take in what’s happening at each Auction so you can be better prepared for when it’s your time to bid.

When you arrive

Auctions can take place either at the property being sold or in-room at a location of the agency’s choice. In-room auctions normally include a number of properties that will be auctioned one after the other, but everything else that happens on the day is pretty much the same as an on-site auction.

If this is a property you’re seriously interested in purchasing you will likely have inspected the home a few times by now and ordered a pest and building report. You’ll have a pretty good idea of how much you’re willing to pay for the property and if financing, you should have a loan pre-approval in place so you know what you can realistically afford.

When you arrive at the Auction, head straight to the registration desk where you will be required to show your driver’s licence and provide some personal details. You will then be given your bidding number. You can then spend some time looking around the property one last time before the Auction begins.

When the Auctioneer arrives, he/she will usually take a quick look around the property, and then chat privately with the vendor and agent before calling the crowd to gather either inside the home or outside depending on the weather.

The bidding process

As the crowd gathers, position yourself so you have good visibility and can easily identify who you might be competing with – they’ll also be holding bidding cards or paddles. You’ll soon be able to tell which parties may have someone bidding on their behalf, such as a buyer’s agent bidding on behalf of their client.

The Auctioneer will start by running through the general Auction guidelines, give a short spiel about the property and then ask for an opening bid. This first bid can sometimes take a while. There are a variety of strategies for successfully bidding at Auction, one of which is opening the bidding early and confidently countering every time another bid is made. Another strategy is to wait until the very end before putting in your bid to make it appear you have deep pockets.

Once the first bid is placed the bidding tends to take off rather quickly. The Auctioneer will call for another bid; they may suggest the price for the next bid or wait for someone to call it out themselves. Eager buyers will call out their next bid and raise their bidding card. If the Auctioneer accepts the bid, they’ll call it out and their assistant will record the figure and their bidding number. Be sure to have your bidding card and number visible when making a bid as the Auctioneer needs to be able to see it clearly in order to accept the bid.

Bids can rise in a number of increments but at the beginning, they’re likely to rise in $100,000 or $50,000 bids. The Auctioneer may knock back smaller bids until later in the Auction, this is simply because they’re looking for realistic bids that will bring the home closer to the reserve price.

On the market and vendor bids

Not every Auctioneer will use the phrase “on the market” but in some cases, you may hear this. This means the bidding has reached the seller’s reserve price – this is the minimum price they’re willing to sell the property for. Anything above this price means the bidders are playing for keeps. Other Auctioneers may use phrases such as “it’s ready to be sold”, “the vendors are ready to sell” etc, while some Auctioneers may not acknowledge when the property has come “on the market”. The reserve will often be kept confidential until after the Auction.

Vendor bids can come at any time there is a lull in bidding. For example, if the bidding started at $2 million but the reserve is $2.3 million and bidding has lulled around $2.2 million, the vendors may signal to the Auctioneer to place a bid on their behalf of $2.275m million to get the property up closer to the figure they were hoping for. This may restart buyer bidding or may cause the auction to be passed in if buyers are no longer interested.

Passed in or sold

If no more bids are being called and the bidding has passed the reserve price, the Auctioneer will use their gavel and call “sold”. If the bidding has not reached the reserve, they will call 3 times and then announce the bidding has not met the seller’s expectation and the property has been passed in.

If you’re the lucky buyer that placed the winning bid, you’ll be asked to sit down with the agents, sign your contract and pay your deposit (all of which you would have negotiated through your lawyers prior to Auction).

If the property is passed in, then it becomes a negotiation between the vendor, the highest bidder and sometimes, the underbidder or party with the second-highest bid. If an agreement can be made on price, the home may be sold after Auction. If no price can be agreed upon, the sellers will re-evaluate their sales campaign and usually place an asking price on the property.

Other things to look out for

You’ll notice a few other things going during the Auction:

  • The selling agent will often go back and forth between bidders to gauge how they’re feeling, whether they’re still in the bidding or what their limitations might be.
  • As previously mentioned, some bidders will come in hard and fast at the start and drop off later – this may be because they’ve hit their limit, they’ve lost their confidence or they’re not willing to go up against one of the more confident buyers.
  • Some bidders will hang back and come in with larger bids toward the end – this is a bidding tactic where they wait until other bidders have dropped out or driven the bidding up to a more realistic selling price. Then they’ll likely come in with a strong bid that can often by their maximum so they have a higher likelihood of taking the property to “sold” and knocking out the competition.

If you would like to learn more about the Auction process or what improvements you can make to your home to increase your sale price, feel free to book in a call with us here.