There I was young and naïve standing in the middle of a packed conference room screaming down the phone to my partner. “Run!” I shrieked hysterically. “Get the hell out of there!” That was my first and last experience with an auction.
I’m part of a fairly realistic, black-and-white type of family. As kids, we were taught not to count our chickens, never to get our hopes up and not to celebrate something until it was an absolute certainty. We’re Irish – it’s in our nature to be pessimistic.
This prevailing attitude means I never expect anything to go to plan. I can’t help it. While I’m more than willing to have a punt on a property, I need the reassurance of safeguards – just in case something doesn’t come through.
I like my stock-standard building and pest inspection period and subject to finance clause. No one told me you had to sort out that stuff before an auction. I discovered this fact in very dramatic circumstances at the age of about 21.
I’d been casually on the hunt for a property for a few months when an agent called with news of a deceased estate sale in Brisbane’s inner city. It was a generously sized, original condition, two-bedroom unit in an iconic, art-deco building with city views. Best of all, it was minutes from the CBD.
Perfect. We inspected it, drew up rough plans for a renovation, calculated our budget, ran the figures by a broker and decided to have a go. It was headed for auction the following week, which we figured would be pretty straightforward.
On the big day, I was scheduled to attend an all-day conference so my partner went along to bid. When the time came, I snuck to the corner of the meeting room, dialed in and listened to the action unfold. From the start, it was between us and another party and it looked like we were about to nab it for a good price.
“Just confirming you’ve got finance sorted,” I heard the agent whisper to my partner. Um. No, we didn’t. Our broker was pretty confident of our borrowing capacity, but we didn’t have pre-approval.
“And you’ve done the building and pest, yeah? Body corporate check? ” No we hadn’t. I just assumed (stupidly) we could do it afterwards. I felt sick, dizzy and irrationally amused-panicky all at once. Like a drunk hyena. Or Lindsay Lohan.
I could feel the room swirling around me and started to make a bizarre panting-come-choking noise. People began to stare.
“I think you should get out,” I mumbled. My partner didn’t hear me. Things at the auction were getting heated. We were clearly in over our heads.
“Go, just go!” I yelled. The conference I was in came to an abrupt halt and the room fell silent. There was no reply on the phone. I could hear the auctioneer revving up. The bid was with us. Sweet Jesus.
“Get the hell out of there,” I shrieked. “Run! We’ll start a new life in Tasmania!”
Thankfully, as the auction was about to be called, the other guys placed a higher bid. That was my cue to begin breathing again and my partner’s cue to head to the pub. It was also a very clear sign we were clueless and needed better guidance before leaping in again.
We know better now, but I’m still spooked by auctions and prefer to avoid them.
Scenarios like this, although perhaps less Cam and Mitchell from Modern Family, play out more often than you’d imagine. Buyers agent Cameron Deal says it’s not uncommon for buyers to go into an auction scenario blind and crash under pressure.
“As even the most experienced investor or bidders can attest, an auction can be variable and potentially dangerous for inexperienced buyers,” he says. I hear you, brother.
A successful bidder requires the perfect mix of negotiation skills, confidence and well-honed tactics, particularly in heated environments when the stakes are high.
Having attended countless auctions on behalf of clients, I asked Cameron to share his top tips for coming out on top on auction day. They are:
- Secure a good vantage point to scope out your competition. Big groups, people who’ve bought their whole family or agents in formal attire are a dead giveaway of buyers (and their representatives) who mean business;
- Learn to spot serious bidders and watch them closely. Come crunch time, it’ll be essential to determine if they’re looking nervous or seem to be at the end of their budget;
- If you want the property, you should bid;
- If the property isn’t so popular, there’s a poor turnout or the crowd is a bit quiet, place a nominal bid. The property will probably be passed in, but you’ll be in a position to negotiate afterwards;
- Don’t go inside to negotiate post-auction. Stay where you are so you can spot any unwanted competitors who might be lurking and waiting for you to leave;
- Be prepared to walk away if the vendor is unrealistic. They’ll be the most motivated to sell on auction day than any other time so prepare to negotiate well.
Shannon Molloy is the deputy editor of Australian Property Investor www.apimagazine.com.au