Delivering the knockout bid in tightly fought residential auctions sometimes requires tactics as much as money, say veteran property buyers.
A bucket of cash will win seven times out of 10, they claim. But for other auctions, the winning mix will be a combination of style, guile and savvy use of a smaller pile of savings.
‘You need to assert confidence, put the other bidders off their game and be ready to apply some intimidation,” says Cate Bakos, a buyers’ agent.
One buyer strategy is to modulate the pace of an auction by requesting smaller bidding increments – which is lawful – and then quickly match higher offers.
Leading property specialists agree that brains can sometimes outmanoeuvre financial brawn in tightly fought campaigns.
But their key message is to always pre-arrange finance, lock in a “stretch” limit (the absolute maximum price) and then aggressively bid to that point – and no higher.
Justin Nickerson, a multi-award-winning auctioneer and director of Apollo Auctions, adds that buyers should attend lots of auctions to feel at home with the street theatre of suburban sales. He adds: “Inactivity is not a strategy. If you don’t bid, you are not going to win.”
Nickerson, who has conducted up to 7000 auctions, says bidding increases buyer confidence and “creates pressure for rivals that becomes overwhelming”.
He adds: “Often those who think they can swoop in at the end succumb to the pressure that just builds and builds and builds – they walk away with the bidding paddle in their pocket.”
If they give the impression they have money – and lots more money left – their competitors will sometimes give up.
Nickerson says buyers’ body language as they gather for an auction often reveals the players and pretenders. “You can tell who is nervous, aggressive or ready to go,” he says. “It’s our job to be empathetic, engaging and understand the right time to [help a bidder] make a decision.”
Auction clearance rates during recent months have routinely been above 80 per cent and higher, compared to around 60 per cent for the same time last year, according to CoreLogic, which monitors markets.
According to the CBA, the nation’s largest lender, buyer confidence continues to grow to record highs. During the 12 months to March, financial wellbeing jumped nearly 8 per cent to a new record of around 51 per cent, the highest level and largest year-on-year increase since the survey was launched in 2017.
But top-end seller and buyer agents suspect recent huge gains cannot be sustained and that the market is beginning to plateau.
Michael Pallier, managing director of Sydney Sotheby’s International Realty, who has sold $750 million worth of property since the start of 2020, encourages buyers to “show confidence”.
You need a well-thought-out limit. You do not want to have more money being forced out of you by an auctioneer.
“If they give the impression they have money – and lots more money left – their competitors will sometimes give up,” says Pallier, whose recent deals include the $95 million sale of a Sydney waterfront mansion in Wolseley Road, Point Piper, in September.
He adds another buyer strategy could be to modulate the pace of an auction by requesting smaller bidding increments – which is lawful – and then quickly match higher offers.
Alex Pattaro, chief auctioneer Ray White NSW, who has sold properties totalling $280 million, says: “You want to be as aggressive as you can. You want to try to knock out the competition.”
But Pattaro disagrees with Pallier about the size of the bid. He says starting with lower increments slows the auction and encourages more people to bid. “The larger the increment rise, the more likely it will scare away the competition,” he says. Alternatively, there could be bidders who swoop in at the end with a knock-out bid.
“It is a tactic that can work, but ultimately it’s about the deepest pockets and strongest desire,” he says.
Bakos says buyers must decide a “sensible stretch limit”.
“You need a well-thought-out limit for how much you will bid. You do not want to have more money being forced out of you by an auctioneer,” she adds.
Rich Harvey, a Sydney-based buyers’ agent and chief executive of Propertybuyer, reckons auctions are often won – or lost – by the preparation before bidding day.
“There’s no silver bullet – it’s a combination of things,” he says. “You need to be out there looking at multiple options. A lot of people set their heart on a particular property. You need to be considering A,B,C and D,” Harvey says.
That means talking to buyers agents, real estate agents, auctioneers and researching sales in your chosen area, adds Bakos. Those considering a renovation need to check with the council about what can and can’t be done, she adds.
“Make sure your finances are in place,” adds Emma Bloom, a buyer’s agent and director of Morrell and Koren.
That includes, if possible, funding for at least 10 or 20 per cent over the reserve and an agreement with the lender to seal a deal quickly, which can provide a competitive edge with sellers who want a short settlement.
“Know what you are buying is good and be ready to strike quickly,” adds Bloom. But don’t over-commit to a mortgage because you have found a “dream home”, she warns.