Despite all the written literature about strategies and tactics during an auction, I believe there are no hard and fast rules for winning. It comes down to a host of variables during auction day and some sheer common sense. I was successful at my first auction and more importantly, I bought the right property at the right time, in the right location and at the right price.
This was my experience:
- Research on the location and maximum price the property is worth. I believe this is the most important aspect. Once you have decided the location is strategic, you need to ensure you do not over-bid and consequently, over-capitalise on the investment.
- Research the market. I think it is important to understand and estimate the point at which the property market is at, that is, is it a weak, falling or strong market and what are the auction clearance rates? By doing so, you will be able to gauge the extent of whether it’s a buyer’s or seller’s market and adjust your strategy accordingly.
- Dress to impress? This is one of the strategies “experts” advocate. I was in a T-shirt and my favourite pair of board shorts and loafers and I beat 6 other parties, one of which was a couple who were dressed in very smart business attire. Different attire means different things to different people. To me, even a bankrupt can be dressed in an Armani suit and drive a nice sports car without a dollar and chock full of credit cards maxed out in his wallet.
- Make yourself notice? This is another tactic that “so-called” experts agree you need to do during an auction. I was standing as far back as possible in a large hotel ballroom where there were at least 200 people, half of which were seated in classroom style facing the auctioneer. I could see the proceedings in the entire room whilst fellow bidders were constantly turning back to try and ascertain who I was.
- Don’t bid too early. This is a strategy I believe in. Why bid when the property is not even on the market yet? I started bidding towards the end of the auction and made 8 bids. One can also keep asking the auctioneer if the reserve price has been met. My winning bid was $1,500 higher than my closest competitor.
- Intimidating your competitors with icy stares and gestures? I kept looking ahead and did not bother with what my competitors were doing. I was prepared to walk away with nothing but this calls for a very strict discipline of not going over my budget and what I have done in my research.
Thus far, I have been successful in purchasing investment properties at all auctions for which I have made bids. I have ensured I have not over-bid on the final price through extensive research and the marginal price difference for which I have managed to be successful.