Auctions are designed for drama: the culmination of a marketing campaign, a public audience, rival bidders and an auctioneer who knows all the triggers for ramping up the competition and, in turn, the price. It’s easy to get caught up in the emotion of the moment while bidding at auction —particularly if you’ve fallen in love with the property. Getting swept up in a furious bidding war is not the outcome you should be aiming for.
The secret to successful bidding at auction is a certain level of detachment.
That can be easier said than done, particularly if you’ve decided to be the bidder yourself. Even seasoned investors can struggle to keep a cool head when a bold new bidder jumps into the fray seconds before the hammer comes down.
Taking the emotion out of the equation is critical.
Despite the fact that an auction can be full of theatrics, for the best chance of success, you need to be able to read the situation dispassionately. That includes identifying the competition, getting a feel for their motivation and knowing when their ‘last bid’ truly is as high as they’ll go so that you’ll know when to swoop with the bid that will knock them out. Asserting your dominance—at the right time—can intimidate, if not eliminate, other bidders, giving you the property at a great price.
Letting somebody else do the bidding at auction on your behalf on auction day can be a smart move. Think carefully though about who you’ll approach—you’re trusting this person to act as your proxy; you don’t want to end up in a situation where they disregard your bidding strategy or upper limit.
Essentially, your choices are:
- To engage a professional buyer’s agent who brings knowledge and experience to your corner in return for a fee
- Ask a trusted friend or family member to bid on your behalf.
There are pros and cons for each situation that you should consider well before auction day rolls around.
On the plus side, having someone else bid for you usually negates the emotional aspect of bidding immediately. Your representative will have no personal connection with the property which means they’re more likely to stick to the limit and reduce the risk of bidding beyond your means.
There are some detrimental drawbacks though if things don’t go to plan. For instance, they may feel that they’ve let you down if they don’t win; they may get nervous or stressed under the weight of responsibility; they might expect something in return or, if things really go awry, the relationship you have with this person could be seriously damaged.
If there will be someone else bidding on your behalf on auction day, make sure all the key pieces are in place well before bidding kicks off:
- The auctioneer has been advised this person is acting on your behalf
- Your stand-in completely understands the auction process
- Your proxy knows your top price before bidding begins and the bidding strategy they are to use.
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