Bidding at a Property Auction is nerve-racking for novice and professional buyers and even some auctioneers.
That said, auctioneers are the pros and were they not auctioneers they probably do well as actors. Their primary goal is to encourage buyers to bid and buy property for the highest possible amount. If they can encourage you to bid higher than you otherwise might have, then so the better. They work for the sellers and they work on commission.
So you are thinking of bidding at a property Auction, what can you do to give yourself the edge?
First let us dispel the myth in most novice bidder’s heads, the idea that a quick scratch of the nose can see you as the accidental new owner of a mock Tudor mansion. This is the premise of sitcoms and in reality doesn’t happen. Even if you are given to spontaneous arm waves in public places, you can always tell the auctioneer that the arm wave was not a bid.
So just relax and adopt their own style of bidding. The auctioneer will quickly establish your bidding style but it’s best to avoid subtle winks and twitches.
Where should you sit if you want to bid?
The best advice is to sit close to and in plain view of the auctioneer. This makes absolute sense for the newbie bidder - why make life difficult for yourself. However seasoned professionals often stand at the back of the room so they can see everyone and nobody can see them. They do this as they don’t want anyone learning their bidding strategy.
It is worth getting there early, if you don’t you may not have the choice of where to sit.
Once the bidding Starts
If you wish to bid, initially you may need to be a little forceful to attract the auctioneer’s attention.
Thereafter, look towards the auctioneer and make positive gestures when you want to bid (you will have been given a paddle so why not waive it). Rest assured, once you have entered the bidding the auctioneer will have ‘locked on’ to you until you either win or drop out.
If you decide to drop out, shake your head or just sit still and look away from the auctioneer.
What increments do bids go up in?
Well this varies between auctioneers, but usually it starts in relatively large amounts (perhaps 2% of the guide price) but these will peter off as the price goes up.
Auctioneers will often start the bidding at or around the reserve price as this is what they are trying to achieve. If no bids are forthcoming then the starting bid price will be lowered.
The number one rule is to decide what you are prepared to bid before the auction and then stick to it. Keep calm.
Auctioneers tricks to be aware of
They’ve been doing it longer than you, they are professionals and they employ all sorts of tricks to get you bidding and bidding high:
- Auctioneers usually reserve the right (in a speech at the beginning of the Property Auction or set out in the General Conditions of Sale) to bid on behalf of other parties including, believe it or not, the seller. The auctioneer is perfectly entitled to do this up to one bid below the reserve price (below which he can not sell) and you may find yourself bidding against the seller alone! If you suspect this to be the case you could retire and then approach the vendor after the auction as an unsold lot. At this stage the vendor may even be open to a lower offer.
- Auctioneers may adopt a tone that embarrasses low bidders or pushes borderline bidders into bidding. Keep calm and ignore this, keep to the plan. This is quite often used when the auction is one bid below the reward and needs that extra shove.
- Watch out for the ‘Off the wall’ bid. This is where the auctioneer takes a bid from nobody or off the wall – commonly used when bidding for the seller below
- The auctioneer will try to establish an adversarial rhythm, pitting you against another bidder to encourage your competitive streak and so it becomes clear that it is your turn to either bid or drop out. This is very effective at getting you to your maximum and then when someone drops out he will bring another bidder into focus.
Tips for successful Property Auction Bidding
- Attend prior auctions as a spectator to get a sense of them. Then when you attend one with a lot of interests you will be familiar with the process and a lot calmer for it.
- Better still, attend an auction run by an auctioneer who will also be running the auction you plan to attend at a later date. That way you may learn something about the auctioneer’s style that may help you when you actually bid.
- Perhaps take a friend for moral support. Tell them what you are prepared to bid up to and ask them to punch you hard in the arm if you exceed it.
- Don’t feel intimidated by the process, the auctioneer or anyone else in the room.
- One strategy is to not even declare your interest until the bidding has nearly finished. Of course this only works if there are other bidders battling it out first.
- Try a ‘Jump Bid’, a technique used by some when the bidding is way below what they are willing to pay. For example, bidding is increasing in £1, 000 increments and you shout out a bid £5, 000 higher. This can be quite effective in psychologically ‘putting off’ other bidders. It effectively sends a message that you will top any bid put forward and they may decide to retire earlier than they might have otherwise.
- If you want to bid less that the increment put forward by the auctioneer then state you bid clearly. Don’t be surprised or deterred if the auctioneer does not accept it.
- You can employ someone (a professional) to bid for you. We recommend that you get a proper idea of what the property is worth and set your maximum. Better to spend a few hundred pound on legal advice and a survey than to spend it on a pro who will simply bid as high as you instruct them to.
- Don’t be shy about retiring – nobody is judging you.
- If you don’t get the property you are after, don’t make impetuous bids on another one.
- AGAIN – set your maximum and stick to it!
Remember to always get a SPAR (Solicitors Pre Auction Report) and a Home Buyers Report before bidding. Otherwise how will you know what the property is worth?
Happy bidding and the best of luck in Bidding at Property Auction.