After months of searching, you’ve found your dream property and it’s listed for auction.
You’ve inspected every square inch, done your due diligence and have your finances in order.
Come auction day you’re pumped and confident that you’re in with a cracking chance.
And then you arrive to find a long line of bidders registered with the same hopes as you.
“The level of competition at auction is incredibly high right now,” says Justin Nickerson, Director of Apollo Auctions and three-time Australasian Auctioneer of the Year.
“Buyers aren’t used to having that fear of missing out here in Queensland and that’s a very real fear right now.”
Historically low stock levels and unprecedented demand are the main forces driving record prices across South East Queensland and beyond.
But there are other factors compounding what Justin describes as a buying ‘frenzy’.
“Interstate migration is particularly strong, people now have more flexibility around working arrangements and the rental squeeze is pushing more people to buy,” says Justin.
“Some 450,000 Aussie expats have also come home, either moving back into their own property – and pushing those tenants into the market – or buying themselves.
“All of those factors, plus a fear of missing out like we’ve never seen before, are driving demand for limited supply and creating this frenzy.”
Justin has been calling auctions across South East Queensland for more than a decade and has 5 key tips for buyers bidding in a competitive auction environment.
1. Have a plan going in
This isn’t a market where you can see what happens and expect things to fall in your favour, says Justin. More than ever, it’s important to have a plan going in.
There is no successful strategy you can build around not bidding. Inactivity is not a strategy, it’s a hope. All you’re doing is pushing all the pressure and decision-making to the last bid, which becomes overwhelming for most people.
It’s also worth noting that in Queensland the auctioneer does not have to announce when a property is on the market (the point at which the reserve price is reached), but they are allowed to do so if they wish.
2. Set yourself three budgets
Justin advises having three budgets which you can put into action throughout the auction.
- The Dream Price: If you got the property for this price, you’d be over the moon.
- The Fair Price: The reasonable price you think the property might sell for.
- The Absolute Price: If the price goes past this point, you’re out.
3. Employ an opening bid strategy
If you know there’s a lot of competition (7 or more bidders) look to employ an opening bidding strategy that shakes most of the competition, says Justin.
Start at 85%-90% of your maximum price because you’re not going to buy it for less than that in this market. You’re better off losing those five who aren’t at your level and putting pressure on the other two or three straight away.
Ideally you want to be placing your first bid at a level you’d be happy to buy the property for because you’re not worried about value. Placing your first bid where you’re not only worried about bidding but you’re also worried about value puts a lot of pressure on your shoulders.
4. Bid quickly
Bidding quickly puts pressure back on the other bidders and creates the illusion that your budget is unlimited, says Justin. It makes it seem like you’ve got no concern as to where the bidding is going to stop.
It doesn’t have to be a huge jump in price each time, but making a quick decision leaves other buyers feeling like they’re under siege.
5. Be the person who gets to negotiate
When the process reaches a point where the auction is paused to confer with the vendor, the party who holds the top bid is the only prospective buyer involved in those private negotiations.
You are the only person who will know the reserve which is the figure everyone has wanted to know throughout the whole campaign, says Justin.
Being the top bidder also buys you time.
If the auction is paused for 5-10 minutes or longer, you’ll have that time to make your decision with all the information at hand.
Even if the auction is resumed, the bid may have jumped up significantly and the other bidders have a very short time to work out if they’re going to buy the property or not.
You’re forcing the competition to make a life-changing decision in the space of 30 seconds.
Most people will withdraw rather than lean in when put under that sort of pressure.
Kollosche has a selection of prestige properties for auction – see what’s coming up.