Auction Bidding Tactics
We often hear stories on the grapevine about auction bidding tricks and tactics, but determining which are advantageous, which are useless, and which are just downright risky is essential. Cate Bakos explains.
We often hear stories on the grapevine about auction bidding tricks and tactics, but determining which are advantageous, which are useless, and which are just downright risky is essential. Many bidders (from professionals to helpful Dads) share their tactics and this article aims to break some of them down for readers to better understand the pros and cons of each.
The first and most often documented tactic relates to bidders wearing sunglasses. Professional bidders almost always adopt this essential piece of workwear for one reason; they can’t be as easily read by other bidders. The shades also enable the buyer to maintain a look of impartiality throughout the process regardless of who their gaze is upon. Buyers can’t just assume that dark shades will camouflage any nerves, however. A professional bidder will look out for all kinds of body language signals, from nervous hands in pockets to constant watch-checking, from slumping shoulders to nervous swallows and Adam’s Apple movement. If a buyer is nervous enough that they fear heat rash striking or nervous swallows being spotted by a professional bidder they can also consider wearing a scarf. Self- awareness of body language and nervous signals should be at the forefront of a bidder’s mind, particularly if they are up against seasoned professionals.
Waiting it out until the last auction call is one of the worst pieces of advice I’ve seen people offer. The risk that any bidder runs when they adopt this approach is that the auctioneer may miss their bid and knock the property down to another buyer at a lesser figure. If the auction crowd is spread out, or if the noise levels of the street and surrounds are distracting for the auctioneer, the risk of a bid being missed amplifies.
Slam bids are a popular tactic for many and used at the right time (and in the right increment), they can have an enormous effect. Over the years (and thousands of auctions I’ve attended) I’ve seen some excellent examples of slam bidding, but I’ve also seen some terrible attempted slam bids also. When a bidder is either reaching their limit or feeling particularly uncomfortable about the auction process, an aggressive and bold bidder can take them by surprise and psychologically put them off any further bidding. Whether it feels intimidating for the nervous bidder to suddenly have a tough new challenger staring them down, or whether the clever bidding tactics created the impression that the opponent had a huge and unstoppable budget, the bid sometimes has the intended effect with just one loud blow. As a professional bidder I’ll apply slam tactics in various situations, but not all. The last thing we wish to become is predictable, so the increments of bids should be varied when an opponent is appearing to weaken under the pressure of the auction. When bidding against another professional bidder, the slam tactic is not one we’d apply given most Buyers Agents stand on their own and bid to a pre-determined limit. Where it can get tricky is if the Buyer’s Agent is bidding whilst on the phone to their client, or if they taking breaks throughout the auction calls to redefine a higher budget with their client.
Driving an expensive car and parking outside the auction as the auctioneer is in full flight is another regular (and sometimes amusing) tactic that some will apply. As is wearing designer clothing and bidding with conviction. What this screams to other bidders is wealth. I’ve adopted some of these tactics with buyers in the past when the circumstances have prevailed. A Chinese-born friend of mine accompanied me to an auction once and her superb clothing and designer look was intended to intimidate the crowd and spell “rich Chinese buyer client” to the already nervous homebuyers I was up against. Whether it was my tactical bidding or her immaculate presentation, we’ll never know, but we did secure the property for a sum significantly under what we had appraised the property at and the other bidder stopped after his second bid.
Applying any intimidatory tactics towards the auctioneer is one of the worst mistakes a bidder can make. Auctioneers have the authority to reject bidders, restart the auction and will be less willing to help any troublesome bidders with subsequent sales campaigns if they create a scene at an auction. The auctioneer is not the person to intimidate. They are merely facilitating the process. It is the opponent bidders who should be the focus of any serious bidder.
All tricks and tactics aside, the best advantage any buyer can gain for themselves is to be financially prepared with preapproval and deposit on hand, be familiar with recent comparable sales, and be informed with updates from the agents about the vendor’s expectations, the other potential buyers and the settlement terms required to be eligible to bid at auction.