8 tips to help you feel prepared for an auction
Get ready for your auction day with these 8 things to consider. From understanding your budget to managing bidding strategies, we guide you through the process so you feel confident and prepared.
The auction experience can be both exciting and tense – it's fast paced and competitive, creating a high pressure and emotional environment.
Here are eight tips to help you get ready for auction day and give yourself the best chance to secure your dream home.
Get cosy with the real estate agents
To get a better understanding of the property’s price range and the level of competition, it’s essential to gather as much detailed information you can from real estate agents. For example – you could ask:
- The number of building and strata report downloads
- The number of contract changes that have occurred
With these numbers in mind, you’ll be able to have a gauge on the competition.
Know the jargon
Auctions can move quite quickly and be highly competitive, which means it’s important to familiarise yourself and understand the terminology that auctioneers use.
Phrases such as “going once, going twice” are used to encourage more competition and prompt a quick decision. Other phrases include “this buyer holds the keys” or “make no mistake, we’re selling today”, signify that the property has met the vendor’s reserve price and is set to sell.
When you’re prepared for the auction terminology, it allows you understand exactly what is going on and stay composed.
Have a strategy
To maximise your chances of walking away with a win, it’s important to have a clear strategy. The two main strategies are:
- Big aggressively early on to potentially outbid and deter the competition
- Wait until the bidding pace diminishes, then place your bid
Monitor recent sales up until auction day
By looking at recent selling prices of similar properties in the area, you’ll be able to get a good indication of the market value of the property you’re wanting to bid for.
Arrive early and analyse the competition
Arriving early to find out how many bidders are registered can help you determine your opening bid. For example, if there are 25 bidders, you may decide to open with an aggressive bid to immediately decrease the bidding pool.
On the other hand, if there’s only a handful of bidders, you could open with a more conservative bid.
Arriving early could also allow you to find a prominent position to observe your competition throughout the auction. Keep an eye on verbal and non-verbal cues from other bidders that show the auction isn’t going their way.
These signs include:
- Facial expressions and body language including Hesitation
- Having an in-depth conversation during the auction with partner and/or family
- Couples and/or families looking at each other
Set a cut-off range
Auctions can be a high-pressure and emotional environment – you want to avoid making hasty decisions.
Determine a price range that you’re comfortable with, as it will give you some flexibility and a guide to use on auction day. The bottom of this range would be your best-case scenario and the top of this range is what you’ll accept to stretch to but aren’t willing to go over.
Obtaining conditional pre-approval from a lender can help you clearly define a budget and remove all the guesswork.
Learn more about conditional approval. If your borrowing power is less than your desired amount, you can learn more about ways to increase your borrowing power.
Stay composed
Bring out your best poker face and stay calm throughout the auction to avoid revealing your intentions to other bidders.
Try to avoid showing that you’re emotionally affected by different situations that occur throughout the auction (eg. becoming upset when you’re reaching towards your bidding limit)
Remember to think about your cut-off range. You want to avoid becoming emotionally vested to the property during auction which could cause you to make impulsive financial decisions above your bidding limit.
Consider using the smaller or odd-numbered bids
Bidding in odd increments can help slow the pace of an auction. This results in forcing the auctioneer to rethink and engage in more challenging calculations.
This could be a helpful tactic if the bidding begins to creep closer to higher end of your cut-off range.
Ready to buy a home? Here are seven upfront costs to consider before buying a home.
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Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).
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Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions are found on our Unloan Terms and Conditions. Modified Terms and Conditions will be set out in our Notice of Variation Agreement, if you are approved. This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.
