Does the thought of bidding at an auction fill you with anxiety and make you want to run for the hills? Or maybe you’re just too time-poor to attend?
Auctions are a great way of figuring out the true market value of a home but they can strike fear into the hearts of those that aren’t used to them.
To make things worse, buying real estate under the hammer can be much more complex than simply bidding. It can also be a scary prospect for many people, especially for those who’ve never done it before.
But did you know you don’t have to bid? Professional bidders are available to help out those who don’t want to or aren’t able to bid for a property at auction.
Read more: How to bid at auction.
A professional bidder will attend the auction with or on behalf of the clients and bid on their behalf. Often professional bidders are also buyers advocates so can help you in a range of matters pertaining to finding a high-quality property.
Buyers Advocates can even help secure a property without needing to go to an auction providing the vendor is willing to negotiate.
Professional bidders use their knowledge and expertise to get the best result for their clients without going above the prescribed budget for a fee, regardless of whether you’re successful at the auction.
Melbourne-based buyer’s advocate, Cate Bakos, says those who employ a professional to bid on their behalf generally fall into three categories – those afraid of public speaking, those who recognise they’re out of their depth and people who are time-poor.
She says buying at auction requires carefully crunching data to settle on a limit, a clear auction day strategy, a cool head and even a bit of psychology.
Professionals will take care of all this, for a price. And as with any other life skill, practice makes perfect, so experience matters.
Thinking of hiring a professional bidder? Here’s what you’ll need to do next:
It’s important to settle on a figure before I heading to the auction. You should have done all your research on what you think the property is worth well ahead of the day and gone over this with the professional bidder.
Attend as many open for inspections as you can on the property – this will also help you potentially figure out the likely competition come auction day.
Make sure you’ve found out the most you can about the property including purchasing any building reports, body corporate fees, rates and charges and allow them to factor into the price you set.
Read more: Terms to know before the auction hammer falls
While there might be a price you think the property is worth, it’s also important to consider the other bidders might be thinking the same thing. Are you prepared to pay a little bit more to get this property?
Try to not get too emotionally involved with the home as this can lead to paying too much for something that might not be everything you imagined in your head. A professional bidder and buyers advocate can help you to decide if your stretch limit is realistic or not.
There are lots of things that play into how much an individual property might be worth, explain Bakos:
“The figure is based on a serious analysis of a property’s features and merits, it’s a combination of factors, including recent comparable sales, market sentiment, time of year and vendor motivation.
“I glean all information possible and then suggest a likely range to my client so that a competitive limit can be set,” she says.
Bakos uses an ‘X, Y, Z’ pricing approach with her clients.
“The X figure is where it should sit, based on comparable sales data, Y is where you sit with competition and Z is the client’s stretch figure,” she says.
The next step happens on auction day.
Bakos says that after over a decade of auction experience and more than 800 auction bidding assignments she’s learnt a lot about auction-bidder behaviour and just because another buyer has a stronger budget, doesn’t necessarily mean that they will be the winning bidder.
On auction day, a professional will be armed with a plan and call on all their experience to read the crowd, to outwit and outlast them all.
Now it’s time for the real action to start.
Bidding at auction can be like a game of poker, with each party trying to figure out the others and what their limits might be.
So if one group starts to get frazzled the others could employ psychological tactics to make them lose their nerve and either pay too much or not win the auction.
Read more: Auction tips: How to read bidders at auction
This is where a professional bidder may be worth their weight in gold, as they know all the tricks in the book and will be more immune to their powers.
“When I bid, I don’t refer to my clients. I don’t stop the auction. Nor do I take any liberties with additional bids over my approved limit,” says Bakos.
“I bid strongly and strategically at the right moments, and my bidding increments are decided on at a moment’s notice, while I digest the mood of the key bidders at the auction.
“It is a game of confidence and strategy and the object of the game is to secure the property at or below the client’s limit,” Bakos says.
While it is no secret cracking into the property market is tough right now, this report can help buyers identify regions that have the most affordable homes in each city and region across the country. Click here to read more.
So how can you get into your own place as quickly as possible while still paying the rent? We asked a financial adviser for his tips on what renters can do to increase their chances of buying. Click here to read more.