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Winners Are Grinners at Auctions – Make Sure You’re One of Them
October 6, 2011
Each year the best of the best Auctioneers in the real estate industry, in Australia and New Zealand, battle it out for the title of Australasian Real Estate Institute’s Auctioneer of the Year. This is said to be the most prestigious auctioneering competition in Australia and New Zealand, in which competitors represent the most professional, skilled and entertaining auctioneers the two countries have to offer.
With Spring selling season now in full swing we at realestateVIEW.com.au have interviewed some of the finalists to bring to you their top tips to secure your dream home at auction.
Q. What tips would you provide to first time bidders at an auction?
Andrew North (Harcourts, New Zealand) says, “Education and preparation is very important – attend other auctions to see how they run, have your finances organised and ensure you understand that you are bidding on a cash unconditional basis. The best tip however is to have clarity as to what you are going to bid up to. I often say to prospective bidders to come up with three prices. First price is the price the buyer would love to buy the property at, the second is what you think is a fair price and the third is your grumpy price that you might go to if you see open competition.”
Adrian Butera (Compton and Green Real Estate of Victoria) believes, “You need to be confident and make sure you have done your homework. This does not only relate to the property and its value to you, but know the agent and auctioneer and how they operate. Each auctioneer may say things slightly differently for example one agent may say ‘I’m going to pass the property in’, whilst another may say, ‘I’m going to deal privately’. Both mean the same thing, however not knowing or understanding may put you in a vulnerable position or simply you may miss out on the property.”
Mark Sumich (Sumich Realty, New Zealand) says, “Go to plenty of auctions before you get going with your serious buying. Understand the nuances and potential issues that can arise at an auction. Talk to some auctioneers about what you have just seen unfold in front of you and ask them why a certain course of action was taken e.g. ‘When you rejected that buyer’s bid of $5000, because you were looking for a $10,000 bid, what are the buyer’s options?’ It might seem self-explanatory, but it is up to you to get all these issues explained, so you are clear in what is occurring. Any auctioneer worth their salt will spend a minute or two explaining events.”
Q. Do smart bidders, bid early or wait until the property is on the market?
Andrew North (Harcourts, New Zealand) says, “There are mixed attitudes toward this. Some say that you are best to wait and not add to the momentum of the auction. A good auctioneer is trying to always create momentum.
“Sadly though, if everyone waits to see what happens then nothing happens. I recall an auction once where I had two bidders who both refused to bid and then came up to me after the auction to make an offer. I put one in one room and the other in another and told them to write their offers. Interestingly enough they hated this more, as now they had no idea what the other was doing and all transparency was gone – yet they chose to do it this way.
“In addition, I often remind potential bidders of their responsibility to show the market to the sellers. A seller is more likely to be a realistic seller if they see the market played out by way of bidding to them.
“A seller will often be keener to negotiate with a buyer who shows a genuine desire to act fairly than a buyer who wants to play games.”
Adrian Butera (Compton and Green Real Estate of Victoria) stated, “Smart bidders know they need to end up on TOP. That means if the home is going to be passed in, they need to not only bid but be on top with the highest bid as its being passed in. This provides you with the opportunity to buy the home at the vendor’s reserve price or at least the option to say yes or no. I have seen over the years too many buyers hold back and not bid. I then pass it in to another bidder only to be approached by a buyer (that I knew was interested but did not bid) wanting to make an offer. I then have to remind them of the rules that were read out – that the highest bidder (not them) will have the first right to buy the property at the vendors reserve price.”
Mark Sumich (Sumich Realty, New Zealand) believes, “Smart bidders get involved with early bids, prompt retorts, bidding higher increments than the auctioneer is looking for and generally being assertive.”
Q. What do people bidding at an auction need to know before bidding on a property?
Andrew North’s (Harcourts, New Zealand) top tips were:
- Check the deposit requirements. This may differ by state / district and it is important to understand your obligations before bidding.
- Confirm the settlement date and possession date.
- Check the terms of sale to see if the vendor is contracting out of any obligations under the vendor warranties.
Adrian Butera (Compton and Green Real Estate of Victoria) states, “I expect that the bidders know about the home. Other factors they need to know before bidding is that IF they buy – it’s an unconditional sale, no cooling off period applies in Victoria (this may differ per state / district), you will need a 10% deposit on the day and any lesser deposit should be agreed to by the agent (who would check with the vendor).”
“Also be aware of the settlement date required by the vendor, any change to settlement that a buyer asked for would need to be approved by the vendor.”
Mark Sumich (Sumich Realty, New Zealand) expressed, “Potential buyers need to know everything about the property. They also should know their legal obligations about bidding and should understand the deposit and insurance issues, not to mention the date they have to pay the balance of funds.”