One of the best strategies for winning at an auction is carefully preparing to lose.
This is true because winning a real estate auction is about confidence. How confident are you in the house you're bidding on — and your ability to pay? How confident are you in your knowledge about current market trends? How will you determine when bidding has gone higher than the value you place on the house — and then have the self-control to back away from intense bidding?
Being calm and calculating, as well as willing to walk away, will set you in good stead at any real estate auction, regardless of which bidding strategy you choose to implement.
Think of it this way: the less certain you are about the marketplace or your finances, the less likely you are to be able to focus on planning and executing a successful bidding strategy — which itself is a separate skill. So you want to have done solid preparation. If you're a first-time buyer, this is likely the biggest purchase you've ever made.
Know the market
The more granular your knowledge about the housing market in your area, the better your analysis of this particular property is bound to be. Knowing the general trends in your city, town, neighbourhood, block and street will help you establish a better sense of the value of the house you're considering.
We know it's generally a seller's market right now — but is there more to know? If you're in Queensland, for example, the upcoming 2032 Olympics will have a significant impact on infrastructure investments and construction around Brisbane. Drilling down to what it will mean for local real estate prices will take some research and investigation. But it's only with this level of thoughtful analysis that you can gain the insight you need to determine how high you want to bid on a property in the area.
One way to gain insight is to query a real estate agent like those of us at Ray White Surfers Paradise. Many of us have unique insight into the market — it's our job! And we're always interested in building relationships with future sellers.
Meet your house
Once you've done your homework on the local marketplace, focus on investigating your dream home or prospective investment property itself. For example, it's always better to know about potential problems before you buy, so arrange for or attend an inspection. Bringing along a building inspector of your own will help you create an even more critical picture. This isn't necessarily a negative — uncovering a potential issue isn't a dealbreaker, it's just something to factor into what you're willing to pay for the house. If it needs a new roof, after all, isn't it better to find out now?
To be a successful bidder, you must understand your financial situation intimately, backwards and forward. How much can you afford to spend? How will you be paying for the house, should you be the winning bidder?
Knowing this information will give you the confidence necessary to bid. And accuracy is paramount: if you under-estimate your financial resources, you might drop out too early and miss out on a home you well and truly could afford. But if you overestimate what you can afford, you'll be in worse trouble. Knowing this reality — that you have to pay up as soon as the auction concludes — should motivate you to prepare seriously.
What does that mean? You'll need to have serious conversations with lenders to establish limits on what you can pay. No matter what, don't get caught up in the excitement and go above these numbers.
If you'd like to learn more about how to stand out at an auction, contact one of our agents. We've seen plenty of bidding strategies play out and would be happy to share our expertise.