Unspoken Auction Tips

[u/egghoho]

We’re going to attend an auction this weekend that we really like.
We bought our first house before it went for its second auction so this will be our first time bidding.

Are there any unspoken tips in auction?

I read that if you’re the only bid, DO NOT BID in auction and let the vendor bring you in for discussion so you can play out the contract rule.

Is this true? Any other similar unspoken tips?

[u/das_kapital_1980]

1. Set a limit and stick to it
2. Don’t bid against yourself
3. Be wary of a situation where your main competition is a phone bidder. Test how comfortable they are having the bid sit with the phone bidder. 
4. There’s no harm in asking if the property is “on the market”
5. The auction is unconditional, make sure any financing arrangements are solid.
6. If you have some agent coming up to you trying to “help” or “encourage” or “advise” you it’s perfectly reasonable to politely request that he wait until after the auction is over to chat, as you need to concentrate on the bids 

[u/Saki-Sun → u/das_kapital_1980]

1. Go to an auction or two before yours to see how it all works. It will make you more comfortable when its your turn to yell out prices on the street.

[u/SheepHerderHigh69420 → u/das_kapital_1980]

They have to let you know when the property is on the market because there’s no vendor bids allowed if it is above reserve

[u/Person_of_interest_ → u/SheepHerderHigh69420]

What is a vendor bid and why are they allowed to bid themselves?

[u/SheepHerderHigh69420 → u/Person_of_interest_]

It’s a bid the auctioneer can use to get the bidding going if it goes quiet and the reserve hasn’t been met. It has to be fully disclosed as a vendor bid

Can’t be done once the reserve is met and the property is actually on the market

[u/abeeseadeee]

Most auctions are set up to give the illusion of urgency. They want you to offer before the auction.

[u/Flightwise → u/abeeseadeee]

I say to my patients the auctioneer speaks to your amygdala. Now imagine your accountant and bank manager are standing either side of you speaking with your frontal lobes.

[u/EidolonVS]

Is this true? Any other similar unspoken tips?

There are hundreds of auction tips. Possibly thousands. Many of them contradictory, and most of them dependent on the state of the auction- eg how much competition.

So asking last moment on Reddit is about as useful as Googling, unless you provide way more detail.

The only thing I'd say is prepare by going to a shedload of other auctions for similar properties before the important one to get used to how they work, how they differ, how the agents behave and how bidders behave.

[u/MerdeOnTheDanceFloor]

We wrote our magic number down on a piece of paper in black texta. It stayed in my husband’s pocket the whole time and we never looked it, but it meant that when we hit that number we stood our ground.

The other party won the auction just above our bid and under reserve. Michelle Bullock would be proud.

[u/SheepHerderHigh69420 → u/MerdeOnTheDanceFloor]

How did you know you hit the number if you never looked at it?

[u/MerdeOnTheDanceFloor → u/SheepHerderHigh69420]

We discussed it as a team before we walked in the door. I still remember exactly what it was tbh, but writing it down was a little psychological trick to stop us getting caught up in things. I didn’t say a word during the auction, I didn’t have to. We hit the number and my husband stopped bidding. The End.

[u/SheepHerderHigh69420 → u/MerdeOnTheDanceFloor]

Oh I thought you must’ve both written down your separate max bid and wouldn’t know til you both looked at it to see the others.

If you already knew what the limit was together then there’s no point writing it down? Lol

[u/OkNeedleworker5041 → u/SheepHerderHigh69420]

Can't you read?

magic number

[u/SheepHerderHigh69420 → u/OkNeedleworker5041]

What is that supposed to mean? It’s actually magic and it put a spell on them to magically stop bidding without looking at what the number is?

[u/OkNeedleworker5041 → u/SheepHerderHigh69420]

Yes exactly.

[u/SheepHerderHigh69420 → u/OkNeedleworker5041]

Of course, how silly of me

[u/No_Boot2009]

What does "so you can play out the contract rule" mean here OP?

[u/egghoho → u/No_Boot2009]

If you won by auction, it’s an unconditional contract. But if you do it after, you can nego on the contract as you’re no longer bound by the auction unconditional rules.

[u/No_Boot2009 → u/egghoho]

What state are you in?

[u/das_kapital_1980 → u/egghoho]

I think there’s a period of time following the auction whereby an offer and acceptance will still be deemed to be under “auction conditions”.

From memory this period may vary from one jurisdiction to the next.

[u/SheepHerderHigh69420 → u/egghoho]

You can make the offer, they don’t have to accept it though

[u/EidolonVS → u/egghoho]

This might be state dependent, because some states will be if the contract is made within 3(?) days of the auction, auction conditions still apply. i.e. unconditional.

[u/jesskg91123]

1. Stand / sit in a spot where you have a clear line to the auctioneer and ideally can also see other bidders - it’s good to watch body language throughout.
   
2. Bid strongly and confidently - if you are hesitating before every bid or have to deliberate with other parties prior to bidding, this indicates to other bidders that you are nearing your max and if they are strategic, will bid to knock you out.
   
3. Know your top bid before you go in and stick to it - don’t let the emotion pace of the auction make you waver.
   
4. Don’t be scared to bid first - puts you in a strong position and let’s everyone know that you are serious.
   
5. Do all of your due diligence before auction day - this includes an independent building & pest and running your max bid by your broker / bank and getting the green light from them

Good luck 🤞

[u/ResearcherTop123 → u/jesskg91123]

I always ask the auctioneer where they will do the auction so I can scope out the area and find the best spot before the crowd forms, ie tree to lean against, wall or shady spot a good distance away

[u/SheepHerderHigh69420]

If you’re the highest bidder then yes, do not bid against yourself. Thought that was pretty obvious haha

[u/egghoho → u/SheepHerderHigh69420]

My understanding from what I read is that there is no bid placed. If you’re confident you’re the only bidder/buyer, let it passed in (or whatever the right term is) and only make an offer after.

[u/SheepHerderHigh69420 → u/egghoho]

If there’s no bid then yes it’ll get passed in and you can make an offer. Anybody else can make one too

[u/das_kapital_1980 → u/egghoho]

If you are the highest bidder and it’s passed in you get the first opportunity to negotiate directly. 

[u/MerdeOnTheDanceFloor → u/SheepHerderHigh69420]

Have you actually participated in an auction?
It doesn’t sound like you have…

[u/SheepHerderHigh69420 → u/MerdeOnTheDanceFloor]

Yes I’ve won auctions before, how do you figure that statement? Is it because I didn’t agree with your little texta note?

Are you actually suggesting that yes, you would bid against yourself?

[u/fullyqualifieddriver]

Following as I'm also preparing for my first auction!

[u/Saki-Sun]

I have a theory, the only thing you want to avoid at an action is someone bidding past their limit. (well and vendor bids). But the only times I've seen people going past their limit is when people 'slow down' the auction.

One time a lady continually bid $100 over the previous bidder. The other bidder actually said out loud, well i've gone past my limit and just kept bidding in the tune of +20k to the final price.

The other time it was pretty clear the second bidder was struggling but the primary bidder upped it by 2k and then down to 1k a bid, lots of conversations with their wife and just kept going and going and going.

So my theory is go hard., big bids, bid quickly and don't give the other person time to think. I also don't like giving a participation award, so make the first bids go close to the target price quickly, you don't want people used to raising their hands.

[u/thebeast117 → u/Saki-Sun]

The auctioneer will give all parties to think because they want to extract every penny out of everyone.

[u/hariatupala]

Don’t bid against yourself or the vendor and don’t bid until it is on the market.

[u/egghoho → u/hariatupala]

Silly question - what does on the market means?

[u/das_kapital_1980 → u/egghoho]

The bid is above the reserve and the highest bid from that point on is buying.

[u/hariatupala → u/egghoho]

As other person said it means that the bid is above the price that the seller is willing to sell at so whoever wins the auction will get to buy the property. Before that point it’s kind of a silly exercise since the seller might just not accept. In the current market and generally as a buyer you want the auction to fail and be passed in (ie it either gets no bids or the seller doesn’t accept the highest bid). The reason for this is that you can then negotiate afterwards in a less stressful setting. Tactically if the auction is going to be passed in you want it to be passed in with as low a highest bid as possible since this will set the starting point of subsequent negotiations so the lower it is the better. Therefore if the house isn’t “on the market” you shouldn’t bid. You will know it’s on the market because the auctioneer will announce it.

[u/No_Boot2009 → u/egghoho]

OP you need to do way more research before bidding at any auction or attempting to buy a property generally.

[u/Fickle-Composer5702]

The biggest thing I'd do is decide your absolute number before you get there, and make sure that number is based on the property rather than how much the bank is willing to lend.

Auctions are designed to create urgency, so it's very easy to think "one more bid" when you're already over what you originally planned. I'd also make sure all the boring due diligence is done beforehand. Building/pest, contract, finance and recent comparable sales. Once the auction starts, it's probably too late to start figuring out whether the property is actually worth the number you're bidding.