Property auctions can be highly profitable for home seekers. However, when the auction is at its peak, it can be challenging, thrilling, and even dispiriting at times. Buyers can go out of their comfort zone and end up paying way more than they had planned earlier.
If you don’t want to commit any mistake on your auction day and nail the property bidding, you have to unleash your best financial self and implement the tips suggested by leading auction experts.
Here are the top 10 tips for buying properties at auctions suggested by property experts:
1. Prepare well
The first thing to do before you appear at the property auction is get prepared. Make a list of things you have to do before the auction. It may include:
- Get a pre-approval letter so that you can confidently make your bids and pay the initial deposit to the sellers.
- If you win the auction, you would have to pay 10% of the sales price immediately; keep that money handy.
- Inspect everything about the property such as building and pest examinations, as you won’t be able to change the settlement once you win the auction.
- Learning about neighborhoods, why the property is being sold, etc.
2. Visit other auctions
Auctions can be confusing if you haven’t been to one before. So, an important step to know the operations of bidding is to visit actual auctions before your auction day.
Go to property auctions, observe the way buyers use the language, and how they implement their strategies. You can also talk to auctioneers, buyer’s agents, and real estate agents to learn about auction proceedings.
3. Ask the selling agent about the price
When going for a property auction, you deserve to know why it is being sold at that particular price.
So, make sure you thoroughly ask the selling agent why the property deserves the asking price. You can also inspect past sales within the same block or street and compare them with your desired property. This will help you understand the actual value you should be paying for the property.
4. Don’t share too much!
Not sharing excessive information is as important as communicating with the selling agent. When you show your interest in a particular property, never share much specifics about how much money you are eager to pay for it, etc.
It doesn’t mean you don’t have to talk about anything and appear suspicious! It simply means presenting yourself as a serious buyer without sharing too much information, as the sellers can use this information to get more profit in the negotiation process.
5. Bid early, start low
There are contrasting opinions on if you should start bidding early or wait till the pretty goes on the market.
However, if you make early beds, you appear to have more control over the situation and understand the bidding on online property auction more clearly. If you are going to an auction for the first time, it is recommended to bid early and go slow without being over-excited.
Also, make sure you position yourself strategically in the bidding room so that you can see the other bidders and can be easily seen by the auctioneer.
6. Go slow
Auctions are not a race where you just hit the full throttle in the beginning to outrun everyone. It is actually the opposite.
If you go big early or place big bids at the beginning of the auction, you might feel confident. But it may eventually increase the competition and value of the property.
The slower you go, the more the seller will be pressured to adjust the reserved price downwards. Slow bids show a lack of interest and might signify that if the property has to be sold, it has to be done at lower prices. So, if the seller actually wants to sell the property, they have to go for a fair price.
So instead of going with increments of $5000, go for $1500 or $2000.
7. Stay confident
Calling your bids loud and clear with confidence, asking questions, and appearing positive can have a lot of effect on your chances of winning the auction.
Prepare well for the auction day. Speak your bids with a confident voice so that everyone in the room hears them. Also, avoid speaking non-lucid terms such as never say the increment amount of $2000; instead, you should say “$202000’.
Furthermore, it is essential to try to appear dispassionate while you make your bids and always ready to walk away if the prices go beyond what you can afford or have planned for.
8. Set yourself a maximum limit and stick to it
There is no fun in winning an auction if you pay more than what the property actually deserves or more than you can afford. It is simply a loss.
To protect yourself from the bidding competition and the win-the-auction-psychology, you should fix a maximum limit for how much you are willing to pay and how much you can afford to pay. Keep this limit in your mind throughout the bidding and once the bidding goes beyond that, simply stop placing bids. You haven’t lost; you have just made an excellent financial decision.
9. Consider using a buyer’s agent
If you don’t have prior experience with auctions or even if you have some, it is highly recommended that you don’t think about managing everything all by yourself. Professionals such as real estate agents or scripts available on Auction Flippers website can help you navigate the complex situations of auctions and even bid on your behalf. Similarly, lawyers and attorneys can make you understand the sales agreement and protect you from falling into a financial mess.
10. Remember – There are other properties for you!
And finally, even if you loved the property and could win the auction, always remember there are others to buy. Don’t attach your emotions with the bidding or the property. If you do it, you might face the risk of going higher than your budget and end up paying way more than you had decided. So stick religiously to your budget and keep searching unless you find your dream home!