When it comes to getting the best auction results, it isn’t just about beating the other buyers – it’s also about knowing when to stop bidding. Whether it’s walking away or letting others take the lead for a while, knowing when to stop bidding is as integral as knowing when to start.
Stick to your budget
Before you turn up at auction, you should be thinking about your budget. We often see people over-extending themselves and giving themselves a serious case of buyer’s remorse. So don’t give in to temptation – know your budget and stick to it.
First, how much have you been pre-approved for? Pre-approval is an integral process to bidding for real estate in Australia or New Zealand, as it allows you to get an estimate of how much you can actually spend on your new property. Remember, auctions are unconditional and contracts are often signed straight after you win. If you haven’t been pre-approved yet, talk to a mortgage broker and find out your options.
Second, think of why you are buying this property. If you are buying for yourself and your family, you can afford to give a bit more of an upper range to your budget due to it’s importance. Investment properties, on the other hand, should be treated more objectively, as there will be plenty of other opportunities for you to invest.
Finally, consider the local market. If the surrounding area is seeing a downturn in auction clearance rates, you may find more sellers are desperate to shift their property. This could result in the property going to negotiation or being put on the market, so setting your budget too high (and bidding up to it) could be robbing you of a bargain.
Control the flow
However, stopping yourself from bidding can be a strategic choice too. You’ll often find novice bidders either failing to bid at all, or bidding all at once and getting swept up into the competition. There is a happy medium to be found.
If you find that the auction has started much below your walk-away figure, consider letting others take the lead so you can knock them out with a huge jump in bids later. Alternatively, a flurry of bids followed by a quiet pause might convince other buyers that you are out of the game, just to surprise them by end-game sniping.
Whatever your strategy, learn when it’s best not to bid. Whether it’s to save you from financial anguish or just to throw others off, your overall success in the world of auction depends on the willpower to remain silent.