18 November, 2019 / Category: Blog
Young or old – no matter where you are in your life journey, bidding at an auction can seem extremely daunting. It doesn’t matter how many times you’ve done it. There is a lot at stake – potentially, your dream house or a well-researched and primed investment property you’ve taken months to find.
Last weekend, I was camped out at a property auction in Elwood. Despite the lacklustre turnout, I observed an affectionate, older uncle bidding on behalf of his enthusiastic, younger niece. They seemed very keen on the property and I assumed they had a clever bid strategy ready-to-go.
When the auction began, he immediately opened the bidding at $2,150 with an advertised range of 2.2-2.3. Smart move, I thought to myself, and a great start but where they started is exactly where their strategy ended.
The Agent immediately put in a vendor bid $2,175, and in quick succession, the uncle bid $2.2. My mouth dropped. He was $50k higher than he should have been, and he didn’t need to be. Personally, I would have advised him to match the vendor bid or not bid at all. Instead, he was higher than he needed to be and was bidding against himself.
These kinds of bidding mistakes are the ones most common among inexperienced buyers. It speaks to a naiveite that could be easily resolved by seeking experienced and expert advice first.
When I advise clients around bidding, I always tell them: just because you can bid against yourself, it doesn’t mean you should. Don’t rush into a purchase, you need to completely understand how bidding strategies work, what you can do that works best for you, and how to negotiate so that you don’t trap yourself into a “box position”.
Make sure to read our other blogs on what we think are the best bidding tactics or what not to do at an auction or get in contact us with us for more personalised bidding strategy and auction advice here.