How to Win at Auction in 2023

The property market was extremely hot across all Australia in 2022 and the main reason for that is historically low interest rates and government incentives that support first home buyers and the whole building industry. As a result, the majority of properties’ sales went through auctions as they provide a great way for sellers to get the best sale price possible while benefiting from the shortage of property supply. 

Though auctions are standard sales, their terms and conditions can vary from state to state — but the process usually stays the same. 

There are basic rules that apply to all auctions Australia wide, despite the state or territory:

• Dummy bids to raise the property price are illegal.
• The property is officially on the market as soon as bids reach the reserve price.
• If a property fails to sell, the highest bidder has dibs on negotiations.
• The winning bidder needs to sign the contracts and pay deposits immediately after an auction sale.

If you think a property is a great purchase, someone else is also thinking the same thing. It’s heartbreaking to obsess over a property for weeks and see someone else snap it up at auction. We’ve prepared a guide that will help you to avoid most common mistakes and get ready for the day of auction.  

In order to win an auction, you need to learn 10 crucial bidding strategies below. Keep reading and find out how to get what you want without overpaying for property.

10 Bidding Strategies to Win Auction 

Okay! Now you know how to prepare for an auction for success, it’s time to learn some strategies to win an auction. These strategies will help you go in strong and hopefully come out on top without getting emotions in your way.

1. Play it Cool

Every action you take will enhance the energy in an auction room. You may think showing your passion will take you to win. WRONG! Enthusiasm is a killer in negotiations. You’ll enhance the enthusiasm of those around you that will take the bidding to a higher price. Play it cool and be focused to outlast the competition. 

2. Be Patient with Your First Bid

So many things can go wrong if you are not careful with your first bid. If you start rushing and showing enthusiasm from the beginning, your behaviour will drive you to a higher price. The more active a bidder you are in the auction process, the more competition you will face.

If you can’t help yourself, it’s best to make a bid at the later stage of the auction. The best strategy is to let the bidding start and come in at a later stage with a strong bid. Doing thorough market research will help you know what is the strongest bid based on property value. It usually lies somewhere near the maximum you want to spend. 

Your ability to come in with a strong bid at a later stage will portray confidence — and, most of the competition has self-eliminated or have reached their maximum — additionally, you‘ll figure out the size of your competition. 

Another strong way you can approach this is by keeping your bid at a minimum. It’s best to be conservative with your first bid and don’t make a higher offer first. This will weed out those buyers who are just there looking for a bargain.

3. Bid with Rounded Figures

The other thing you can do is not to bid in odd numbers such as $59,000, as someone will only need to add $500 extra to come at the top. Most participants do this to slow down the bidding process. In this situation what you should do is to put yourself back on the top again by immediately bidding for $500 extra.

4. Be Proactive and Aggressive

If you want to portray yourself as a professional at auctions, you have to deliberately become aggressive and unemotional in your approach. This will unsettle other bidders and crank up the pressure. This approach only suits those who have experience and know what they are doing. So be careful, otherwise, you may end up paying a higher price than needed.

Having done your research, and feeling confident will make you proactive while bidding. And, this is the best approach to win auctions. Leveraging this approach will make other buyers uncertain and enable you to exert control by setting expectations — and, uncertainty makes people withdraw out of the process. 

The traditional strategy for inexperienced bidders goes like this: you wait till the end and hope the property does not exceed your budget. This approach is fine if you have the deepest pocket, but it is a reactive approach and being successful in this approach heavily depends upon luck. 

5. Try to Meet Settlement Period

If a seller wants a shorter settlement period, you should try and match the seller’s terms, this way you can influence them to lean towards your offer. On the contrary, if a seller hasn’t found a home to move into yet and would prefer a longer settlement, accommodating the seller’s needs will work to your advantage. 

6. Make an Offer Before Auction

This strategy is great if you are sure this is the property I want. You should consider making an offer before the auction, this will give you a competitive advantage. If your offered price falls above the reserve price, — the seller has to make a choice whether they want to lose your offer or go to auction. You can use this technique in those areas where the property market is more volatile. 

7. Waive the Cooling Period Off

It is the same as meeting a seller’s settlement period. It is favourable for you if a seller wants to sell their property fast because you reduce the period before settlement by offering this term. However, keep in mind that waiving the cooling period off does not apply to an auction in Australia — where buyers before and sellers exchange contracts on the auction day and there are no cooling-off periods. You can only waive off this period in an offer before the auction.

8. Show the Seller You Can Pay

If you can make the seller certain that you can pay, you will get an immediate advantage. A seller or a real estate agent working on behalf of the seller can ask you for a pre-approval letter. Your lender can provide you with a pre-approval letter that shows a loan with a fixed amount of money based on an assessment of your income, assets, liabilities, and credit history. 

Having a pre-approval letter not only shows you can pay but also gives you an idea of what you can or cannot afford. Providing a letter of pre-approval gives a seller certainty and makes you a better candidate. 

Here at NG Loans, we help investors and home buyers get loan pre-approval. If you are looking to participate in an auction, you can book a call with us to learn more.

9. Read the Non-Verbals

Emotions run high during an auction, and you will experience people fidgeting, sweating, shuffling, and doing all that kind of confusing stuff. Couples are a gold mine of information as you will see one of them doing the bidding and another a total nervous wreck. If a couple is saying nothing and looking into each other’s eyes, they are likely telepathically asking “what do you think?” — This means that either they are about to opt-out of the auction. 

As people are about to reach their maximum budget limit, their tension will rise. If they have already maxed out, you’ll see them disengaging and relaxing their shoulders. 

These people will likely walk away any minute — meaning less competition for you.

When auctioneers ask to bid, watch out for those who are calm, composed, and silent — this is a sign that they still have funds to play with — meaning they are still your competition. Other than that, people breaking eye contact, and doing the uncomfortable shifting will not have any suggestions of advancement. 

If anyone is making a last-minute phone call during the bidding process, they are likely calling out of desperation asking permission to proceed over an already decided amount. These bidders busy on their phones are almost there to opt-out.

10. Send Someone Else

If you can’t handle stressful situations well enough, you should consider sending someone else on your behalf. If you fear you’ll not be able to control your emotions, ask someone trusted to bid on your behalf. Guide that person about your terms and strict budgeting limits.

You can also hire professionals who make their living by representing buyers in auctions. They know how to handle those highly emotional and stressful environments. You can leverage their expertise to win auctions as well.

Looking for financing to bid in an auction? Contact our mortgage experts at NG Loans and get home loans at the lowest rates and with better terms — and, we will connect you with an auction professional too.