Firstly, what is a virtual auction?
It’s 2021, lockdowns across the state and the nation have become an uncomfortable norm… for now, so virtual auctions are here to stay.
Lloyd Edge, Director of Aus Property Professionals and author of best-selling Positively Geared says, “A virtual auction essentially works the same way as traditional auctions, but they are conducted virtually. This means no crowds, so you will usually just see the auctioneer and the agent, in the agent’s office or at the property. Virtual auctions provide the safety and comfort of being able to bid from your own home, or anywhere you have access to a mobile device.”
He continues, “The bidding process is the same, and only the human face-to-face element is removed. As a buyer you are bidding from the comfort of your own home and this may assist you to stay calm, confident, and level-headed.”
How do you attend?
If a property is listed for a virtual auction, from the time that the property is listed online you will be able to register for the auction and it will stay open right up until the start of the auction. The real estate agent may encourage you to register early. This will assist them to know you are an interested party who will be bidding, so they can keep you up to date leading up to the auction, but most importantly to ensure that you are comfortable with the process when auction day arrives. It also provides you with familiarity of the auction platform. It is also recommended that you watch a few auctions prior so you are comfortable with the process.
So, what can you do to get ahead of other buyers? Lloyd Edge has shared his top tips.
1. Be prepared.
Preparation is always the key to successfully securing your next home or investment. It is however even more important in the online auction environment as you will need to have everything organised and know your position prior to the commencement of the auction. As an auction sale does not come with a cooling off period, you will need to ensure that your finance is pre-approved prior to bidding.
You will also need to have arranged your own pre-purchase pest & building inspection, and/or strata report if purchasing a strata title premises and review them with your solicitor, conveyancer or buyers’ agent. You must be satisfied with the findings of the reports. If there is anything that needs to be negotiated as a part of your purchase this will need to be done so prior to the auction e.g. additional inclusions/removal of rubbish. You must also ensure that any terms or conditions unique to you have been negotiated prior to the auction e.g. if you will be altering the standard settlement period, deposit amount or release of deposit clause, so that your solicitor or conveyancer can have these terms altered and ready for you to sign when you win the auction.
If you will be bidding at the auction on your own behalf, your driver’s license will be satisfactory to register to bid. If you will be bidding on someone else’s behalf ensure that you have their letter of authority. Finally, if you will be bidding on behalf of a company or trust, you will need a letter on a company letterhead including the CAN. It is best that you register ahead of time to ensure that nothing further is required.
2. Have a solid strategy.
There are many different strategies to employ when bidding at an auction, be it via traditional or virtual methods. In an auction, you are up against other buyers who are just as eager to scoop up their dream property. In order to ward off the crowd, it is key to build a perception of confidence and determination. Understand when to bid and how much to increase your bid by. Act like a professional buyer and this could lead to a successful bidding strategy. As the auction gets more heated, it is easy to get carried away, but it’s imperative to stay level-headed and to calculate the action around you.
3. Be the confident bidder.
One of my top tips to give buyers the best chance is to appear to the other buyers that you have an unlimited budget, no matter how hard they try and what bid they put in. This may de-motivate the other buyers and put you good stance at winning. The confident bidder will give the first bid, when the auctioneer asks for opening bids. To give the appearance of an unlimited budget, you must be confident in knowing what your limit to spend is. No matter the price that the other bidders throw out, if you immediately come back with a counter-bid very quickly then they will start to get nervous and believe that they really have no chance. Even if you are nearing the top of your budget, if you are confident and offer a counter-bid in quick succession (even if its $1 000 and you’re at your limit!) the other buyer may feel that there is no point in trying to squeeze another few thousand in their bidding because you’re always going to counter offer anyway.
This strategy won’t be suitable for everyone but if you miss out on being the opening bidder, you can still bid back in your favour during the auction. You may like to watch the bidding take off before joining the “party”.
4. Know and be comfortable with your budget.
Lastly, be comfortable with your budget, but also know if that budget can be stretched even just a tiny bit should the property end up higher, even only marginally during the auction. Write down your maximum offer prior to the auction and consider if the bid were to be $500 or $1,000 or even $5,000 above this maximum, do you have the means to stretch this final amount if that means securing the property. Or would you be willing to miss out on this property for the sake of $500, $1,000 or $5,000?
Explore any avenues that may be able to facilitate even those marginal increases to your maximum offer so should the need arise during the virtual auction, you can increase your maximum bid with confidence and ultimately win.
By Lloyd Edge, buyer’s agent and Director of Aus Property Professionals