Auctioneers reveal biggest mistakes bidders make at auction
Auctioneer Michael Garofolo said buying at auction was like playing a round of poker. Picture: Sam Ruttyn
There’s no one size fits all approach buyers can use to win every auction, every time, but unsuccessful bidders frequently make the same mistakes, housing experts revealed.
A common blunder was not staying attuned to recent market changes and working out a budget to match comparable sales.
Sydney’s auction market has been heating up in recent weeks after a long slumber over the holiday period and it remains a seller’s market. Close to 80 per cent of the 400-odd homes that went under the hammer last week sold successfully under the hammer, while the week prior it was 75 per cent, CoreLogic data showed.
The auction clearance rate was closer to 55 per cent over the same period in 2019.
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Prices are also up – the median price of a Sydney home, including townhouses, units and detached houses, increased nearly 6 per cent over the past three months. The biggest gains occurred in the northern beaches, Hills district and Ryde.
Realestate.com.au chief economist Nerida Conisbee said the current market environment required buyers to be quick considering there were more buyers than properties in most areas.
No. 65 Harrow Rd, Stanmore goes under the hammer Saturday.
It was also not a market where buyers could easily eek out discounts at auction, she said.
Auctioneer Michael Garofolo of Cooley Auctions said many buyers made the mistake of believing vendors “would give away” properties and were registering at auction hoping to get homes for under value.
This often left them ill-prepared for the pressure cooker environment auctions have become, he said.
“The most common mistake I see buyers doing is not working out what their budget is before the auction,” Mr Garofolo said.
“The bidding starts to get high and they start looking at each other and they don’t know what to do. They don’t know their limit, their body language changes, and it encourages other bidders to stay in the auction.”
Another mistake was using too many small bids, Mr Garofolo said.
“Increasing by $500 or $1000 is not going to scare anyone away in a hot auction, it will actually encourage them to (keep bidding) and you might pay more.
“If you make bolder bidders it’s more likely to make other bidders think twice about bidding again. It seems like you’re paying more but you actually save because you discourage other bidders.”
Mr Garofolo compared it to a high stakes poker game where bidding low often encouraged other players to stay in the game, while aggressive bidding at the start could sometimes get rivals to fold early.
Like in poker, bidders often made the mistake of revealing their “tells” which gave rivals some insight into what their budget was, Mr Garofolo said.
“You don’t want to give too much away. You don’t want to reveal anything about your budget through your body language or through your actions … if the auctioneer and the other buyers can’t read you, you’re not hesitant, you’re not checking with others to see what to bid, it puts you in a strong position.”
Auctioneer Damien Cooley said most bidders didn’t pay enough attention to the body language of their rivals. Picture: Justin Lloyd
But Mr Garolofo cautioned that winning an auction, like any high stakes game, was more an art than a science. “There is no ‘right way’ to win an auction,” he said. “Different properties, different bidders could all require a different approach.”
Propertybuyer.com.au founder Rich Harvey said buyers often made the mistake of not cluing themselves up on the auction process and arrived to bid not knowing how the process worked. This often left them bewildered by unfolding events and confused by terms such as “on the market” and “vendor bid”.
Mr Harvey said bidders also made the frequent mistake of getting rushed by the auctioneer and agent. In reality, the auctioneer could call the property as many times as they wanted, it only became sold once the hammer dropped, he said. “Run your own race, not the auctioneer’s.”
Most bidders reveal a lot about their strategy and budget and knowing what to look out for could give you a potential edge, one of Sydney’s leading auctioneers claims.
Cooley Auctions founder Damien Cooley said the body language of other bidders often showed how close they were to their max.
Bidders often revealed a lot about their budget and strategy from their body language.
“Couples who look at each other may be close to the end of their budget,” he said. “They may have come to the auction with a number and as the bids approach that and they get nervous they will look to each other for guidance. That’s the point where you should increase your increments if you can.”
Bidders who still had plenty in the tank left to offer usually showed little emotion. “As an auctioneer, if there is a high opening bid and there’s a registered bidder who doesn’t flinch, doesn’t look put off, it’s usually a sign they have a bigger budget.
“If they are with a partner and they’re not having any conversation among themselves it is a sign they will spend more.”