Bidding strategies for those buying at auction
One of the biggest differences between buying a property on the open market versus buying at auction is the visibility of a rival. Instead of having zero or little knowledge about others interested in the same property as you, purchasing at auction means you have real-time competition.
If you’re attending an auction house event, a fellow bidder may be sitting just feet away, while you may be involved in a live ‘ping pong’ bidding war when taking part in an online auction. It can be an unusual and sometimes off-putting situation – especially when coupled with the speed at which ‘in the room’ auctions run - so knowing how to approach bidding is a good idea.
Move Places has been successfully running online property auctions for years, so we’re well placed to offer advice on keeping a cool head and managing your bidding strategy. If you’re heading for the auction room any time soon, you may like to consider the following:-
Make the bid yourself
Bidding in an auction house setting can be an exciting affair. You’ll need to be punctual and prepared to move fast, as the auctioneer will want each property lot concluded swiftly, especially if there’s a full catalogue to get through. Remember, there will be no time for dithering and contracts exchange when the gavel falls.
Online property auctions, like those run by Move Places, work a little differently - and to the advantage of the cautious buyer. Our auctions run over a number of days – weeks even - allowing people to make measured, considered bids without the ‘in the room’ pressure.
If you’re worried you’ll get carried away and blow your budget at a pressurised physical event, an online auction may be your best friend. You can place bids at any time until the auction period ends and as it’s a totally transparent, real-time process, you can see and respond to other bids when the time is right.
‘In the room’ etiquette
If you’re heading for an auction house, where you sit may affect your chances of your bid being seen. Make sure you are in clear view of the auctioneer but avoid sitting at the front, as you won’t be able to see what your rivals are doing.
Auction rooms may give out numbered paddles that bidders should hold up when they want to bid, whereas other auctioneers will ask you to raise your hand or nod your head if you want to make an offer. Always be deliberate and clear with your bid action, and try not to unintentionally make an offer. Don’t panic, however - an inadvertent bid from scratching your nose is rare and it should be retractable.
Get someone else to bid for you
If the thought of bidding yourself fills you with dread - or the event doesn’t work with your timings - it is possible to get someone else to bid on your behalf, both at auction houses and during online auctions. This is known as proxy bidding and bids can be read out in the room, taken by telephone or applied automatically by the auctioneer.
Either an estate agent, solicitor, the auctioneer, a friend or a relative can place bids on your behalf, as long as there is a signed Proxy Bidder Form giving them legal permission and a pre-agreed ‘highest bid’ that shouldn’t be surpassed. As a result, proxy bidding is a great strategy for those who are worried they may go over budget in the heat of the moment or want to step away from a ‘live’ auction situation.
One ‘moon shot’ bid versus incremental rises?
While it’s tempting to make your first bid your final and highest bid – perhaps a ‘moon shot’ ploy to outfox the competition - you could end up overpaying for a property that may have sold for much less. Increasing your bid incrementally is still regarded as the most sensible bidding strategy but we suggest you don’t bid first. Let others come forward and show their hand, then base your first bid on their offer - or even choose to opt out. And don’t hold back if the auctioneer’s bid increments are too steep – you have the right to bid a unique amount between the last bid offered and the next increment suggested.
Pre- and post-auction bids
The actual auction isn’t your only opportunity to buy a property lot. You could make a speculative bid before the auction starts, hoping the seller will favour you and withdraw the property from the sale. More common is making a bid for a property after the auction if the reserve hasn’t been met.
We’ve already written a blog about the benefits of online auctions versus ‘in the room’ events, which you can read here. If you have any further questions about selling property fast, why not contact the Move Places team?