8 top tips to increase auction win chances

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Property expert and head of research at InvestorKit, Arjun Paliwal, reveals his on-the-day and pre-bidding tips to ensure you have the best chance at winning on auction day.

1. Shortlist several properties, not just one

To avoid having to start house hunting from scratch after losing out in the only auction you had planned, make sure you have a shortlist of several properties to fall back on. This also minimises the chances of being swept up in the emotion and action of the auction and paying more than you planned for. Looking at more than just one home means you’re less likely to make a regretful over-purchase.

2. Monitor the most recent property sales right up until auction day

The current market is undeniably hot, so using the traditional approach of evaluating the previous three to six months of sales as a property value guide will ultimately give you an inaccurate price. With prices rising so rapidly, you would be three to 10 per cent behind the correct price. By looking at comparable sales to ensure you have a realistic price guide, it’s best to continue researching right up until the day of the auction. Also, to get a guide on a recent sale or a house under offer, call local agents to gain their insight.

3. Compare apples with apples

When researching, ensure the properties you’re comparing have similar features, and investigate the specific details and features of the homes. For instance, are you comparing one property that’s flood or bushfire prone to another that’s not affected by either? Do they both have a pool, or a bus stop in front?

4. Set a cut-off range, not a cut-off price

Rather than determine a specific maximum cut-off price, find a cut-off range that you’re willing to pay. The bottom of the range is a ‘fair value’ price that’s realistic for the property, and the top of the range is your non-negotiable price. This gives you some wriggle room when it comes to how much you’re willing to pay.

5. Understand the market by attending open homes and auctions

You’ll be better prepared and less surprised during a bidding auction if you visit open homes for private properties and attend auctions in the neighbourhood as part of your preparation. This helps you better understand how many bidders you may be up against and an idea of how much interest there is in the area.

6. Follow property professionals trend reports

Research is obviously so important when it comes to the auction market. CoreLogic provides great overview and analysis on the property market and have recent performance trends based on different areas and suburbs. The key tip is to evaluate what a property may sell for based on the research and then compare it with what it ends up selling for on the day. The difference will provide you with a stronger guide of what the property you want to bid on will realistically sell for and not leave you blindsided.

7. Wipe out the competition early by placing a strong opening bid

To wipe out bidders who didn’t do their homework, consider making yourself known with a strong opening bid to reduce the auction heat. When there’s too many bidders at the start, it can bring out people’s competitive spirits and see high bids placed too quickly. For example, if you’re willing to go up to $1.5 million on a property, start your opening bid at $1.25+ million to scare off the competition.

8. As you near your cut-off, place smaller or odd numbered bids to slow down the auction

To reduce the heat and slow down an auction, so bids don’t reach a high price too quickly when you’re close to your end price, consider bidding in one-, five-, or ten-thousand-dollar increments, or odd numbers. The auctioneer and bidders could be forced to slow down and evaluate their bids due to the unexpected numbers and could reduce the intensity, making the price not rise as quickly.

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