Auction season is in full swing this year with a record number of auctions held last weekend. The REIV offers a few tips for potential buyers on how to bid at auction. Before you attend the auction, ensure that you have a plan including knowing when you intend to commence bidding and at what price point you should stop.
On the day of the auction ensure you arrive early and make a final inspection of the property. You can check the contract of sale, vendor’s statement, and auction rules which should all be on display for at least 30 minutes before the auction commences. If you have any questions about the auction rules, ask the agent in attendance.
Before the auction commences, be sure to position yourself where you can see the auctioneer and where they can see and hear you. Make your bids clear by announcing them and raising your hand. During the auction, the auctioneer should announce if the property is “on the market” if the owner’s reserve price has been reached. If the reserve price isn’t reached, the property will be passed in to the highest bidder, or on a vendor bid.
If it is passed in, the owner must first negotiate with the highest bidder for the purchase of the property. So if the auctioneer announces that the property is going to be passed in, it is a good strategy at this point to make sure you are the highest bidder to secure this option to negotiate with the owner. Once the property’s passed in, it is too late. The auctioneer can’t re-open the auction to accommodate a late bid and override this option that someone else has secured ahead of you.
While the owner needs to negotiate with the highest bidder, if you are not prepared to meet the owner’s asking price, the owner may end negotiations with you immediately and start negotiating with another interested party. If you are not confident about bidding at auction you should consider using an REIV buyer’s agent, who can be engaged to assist with all aspects of the process, including the bidding.