Auctions. Usually dreaded, sometimes feared and often avoided.
But when a buyer has success at auction, can they ever put it down to Tactics?
Absolutely.
Of course we know that some auction results are a perfect correlation with budget. A willing buyer who is prepared to fight in a price war will always have an increased chance of success.
Other auctions sometimes surprise even the most seasoned of us and luck can play a key role in the resultant price. For example, a key buyer may drop out of the race at the last minute. A bidder may get stuck in traffic and miss the auction. A job could be lost, rending the buyer’s finance pre-approval invalid. Maybe a newly listed competing property could steal some hearts and reduce the buyer pool.
Whatever the circumstance, luck can strike.
However tactics are a separate issue. Based on the true meaning of the word, it involves a carefully planned action to achieve a specific end.
Tactics are often debated among the property community as either being advantageous or useless.
Some argue that a tactical bidder has no greater or less impact than any other bidder, and the final result comes down to the winning bidder’s budget.
We completely disagree.
In our years in the field we’ve seen countless examples of bidder behaviour in response to intimidatory or assertive bidding. Buyers have often come forward after the hammer has fallen to ask for our card, or to advise us that they thought we had a significantly stronger budget than we actually did. Agents have commented on our bidding style and have sometimes told us when one of their earmarked buyers decided under the pressure of the auction not to bid.
The most critical task a capable bidder faces is reducing the time for bidders to ‘re-think’ their budget or determine an upper limit while the auctioneer is in full flight.
It may surprise readers, but most buyers don’t actually have a top-end figure in mind.
The majority of buyers will ‘wait and see’ with a vague idea of where to start their bidding. It’s often the “where to stop the bidding” part of the equation that doesn’t get enough attention.
Determining a bidding strategy while a person with a gavel is screaming at you in a crowded street is a recipe for disaster, particularly if you are new to the bidding game.
Today’s auction in overcast Coburg was a surprise for more than just a few of us. Two other bidders had been identified and the agents confirmed that they were on their buyer-radar also.
Their body language was their giveaway.
Buyers are usually unaware, but any of the following hallmarks can enable an opposing bidder to read their nerves;
- Pacing
- Smoking
- Fiddling with their hands
- Continual checking of their watch before the auction bell rings
- Partners standing still like a pair of statues despite the fact that the person they are most comfortable with is right beside them
- Not holding a property brochure. Most dedicated buyers won’t need or take a brochure. Chances are they’ve got one or two and may have even drawn extension plans all over the back of it
- Standing behind Dad… while Dad puffs his chest up and plays his best poker face.
Today’s auction had two buyer groups in the crowd exhibiting a combination of these traits. I positioned myself opposite a Dad and put my shades on. The sun wasn’t out and the shades may have looked ridiculous but it was part of the plan. I exhibited every ounce of professional bidder I could muster.
Whether it was bad luck on their side, good luck on mine, or a combination of intimidation with the bidding style, nobody else bid.
The auctioneer called his final call not once but three times. He gave everyone a chance to come back in with a bid.
The property was passed in to me and I went inside to negotiate successfully for our happy couple.
The last auction I’d bid at involved energetic bidding above the Vendor’s reserve which meant that my ability to influence other bidders to opt out needed to be put to the test. Of course some would say that the other bidders reached their limit, but one indecisive bidder signalled he was ‘out’ and then re-emerged two more times. Limiting his comeback with a final blow rounding the price up by $4,000 after his $1000 was tactical. He’d determined that I wouldn’t stop.
He didn’t realise that I had $2,000 left in my budget.
Tactics definitely help any player’s hand, but the most beneficial element that any bidder can create for themselves is a firm top end figure with a bit of science behind the planning.