Bidding at auction, for the uninitiated, can be a nerve-wracking affair. And rightly so – spending thousands of dollars with the wave of a hand is not something most of us do everyday.
Damien Cooley says despite how intimidating they can be, auctions are still the most transparent way to buy real estate. Bidders can benefit by seeing who their competition is and how much they’re willing to spend. However, it is this transparency that means the professionals can read you too.
Nervous buyers, who want to have the upper hand, should consider getting an experienced, or even professional, bidder.
“Understanding the benefits of why someone should represent an inexperienced bidder at auction includes understanding the role of an auctioneer,” Cooley explains.
“The auctioneer is there to get the best price out of the buyer. And in doing so, focuses immense attention on buyers’ body language. Professional buyers also give away signs, but less often,” he added.
“The most common mistake I see made by purchasers is not watching the body language of their competition. You can read a lot about a buyer when you watch the way they handle themselves at an auction,” he says.
Cooley says even couples, who may think they’re showing a united front, give off certain signals when bidding.
“They tend to give away when they are nearing their limit by looking at each other, or taking too long to come back with a bid. The longer you take to make your bid, the more hope you give the buyer you are competing against. If you have a budget you should be bidding confidently to show the other buyer you have more to spend,” he says.
Inexperienced buyers will often stop short of their final dollar amount, which means they could walk away from the auction feeling frustrated.
“Let’s say they have a $730,000 budget for a property and their final bid may be $725,000. They should have gone straight to $730,000 – or even $731,000,” he says.
According to Cooley, who has successfully auctioned five of the winning properties on The Block (several of which have sold to professional buyer’s agents) inexperienced buyers often overlook that both the selling agent and the auctioneer are working for the seller and therefore have a certain plan of action.
“When a buyer is deciding whether they should bid $1000, or $5000, the auctioneer will suggest increments of $5000 and use pressure tactics like calling the property ‘going once, twice, three times’ or even raise the hammer to create a sense of urgency for the buyer to bid. This forces the buyer to decide faster and puts the pressure on.”
“Remember that the auctioneer or the agent do this all the time. A buyer does it maybe a few times in their life. A professional buyer can potentially save you $10,000s in a negotiation, either before the auction, during the auction or post auction,” Cooley says.