Everything you need to know about becoming an auction bidding pro

Buying a property at auction can be intimidating for a first-time buyer. Luckily there are a few steps you can take to prepare for an auction in advance. Armed with some practice and the right knowledge, you'll soon be bidding like a pro.

Go to a few auctions just to observe

Even if you think you've seen everything you need to know on auctions on TV, a bit of firsthand experience always helps. Find a few auctions in your area and go along just to get comfortable with the process. Observe, ask questions and learn as much as you can. When you're ready to bid at an auction for real you'll know exactly what you’re in for.

Do your research

For prospective home buyers, information is almost as useful as a pile of cash. Coming into an auction with a solid understanding of a property's value is essential.

Ask the real estate agent for examples of recent sales comparable to the property you’re looking at buying to get a clear benchmark. And don't take these comparable sales at face value. Look at them in detail to make sure they really are similar to the property you have in mind.

The value of a property is ultimately whatever anyone is willing to pay for it. But if you come to auction with an inaccurate estimation of a property's price, you could end up paying far too much.

Before you head to auction, make sure you’ve done a property inspection or received a strata report so you know the quality of the property ahead of time. If the property you're keen to buy needs renovations, get quotes from several tradesmen and factor this into your bid.

Talk to us about getting pre-approval¹

Nothing distinguishes the serious home buyer from the casual window shopper like pre-approval. Essentially, pre-approval means that your bank has conditionally agreed to lend you a specific amount of money.

It's not the same as actually getting approved, but it signals your seriousness as a buyer and allows you to bid with some confidence because you know roughly how much you can borrow.

It also gives you an advantage over buyers who aren't pre-approved, especially if the property is passed in and goes to private treaty negotiation. If you are the only interested party who is pre-approved, you'll have a much better chance of buying the property that you're after.

Getting pre-approval means you first need to do your research to find the right home loan type and lender for your situation. This is a big step in itself and you shouldn't lose sight of it while searching for a property.

Have a bidding strategy

Your strategy can be as simple or complicated as you like, but there are some basic principles to follow regardless. Bid loudly, with confidence and say the full amount when you bid. Don't hide up the back of the room. Know your limit before bidding and don't go past it. When bidding, start low and raise your bid slowly if you can.

Consider a buyer's agent

If you're really not confident with the auction process, consider hiring a professional. Buyer’s agents can help with the whole process of buying a home and they can attend auctions and bid on your behalf. You'll have to pay for the service, but it could give you an edge come auction time.

We are here to help

Whether you are looking to bid at an auction, purchasing or building a house, contact us to see how our experts can help.

Written by Richard Witten.

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