Bidding at auction, especially for the first time, can be a stressful experience. That’s why it’s important to be as prepared as possible. By spending time learning more about the property, comparable sales in the area, and the auction process, you can be better prepared to take action decisively come auction day.
To help avoid making any big mistakes and missing out on your dream home, here are three common mistakes made by first time buyers at auction and how to address them.
This applies to almost every aspect of the bidding process. It’s a lot of money and probably one of the biggest decisions you’ll ever make from a financial perspective, so you don’t want to make a mistake. Whether it’s a specific bid you’re unsure about or the worry of “paying too much”, hesitation can sink your chances at an auction, especially if someone else sees it in your bids.
Be ready to start bidding immediately. If you did your homework and know the value of a home, recent sale prices in the area, any issues that might affect this particular home, and have a hard stop in mind for what you can afford, bidding should be easy.
Additionally, remember that an auction is a living event. If you slow your bid, pause longer than you should to consider what you’re about to spend, and give your opponent time to reconsider their own position, you risk spending more or worse, losing the auction. Be decisive and know what you can afford.
When bidding, be confident and don’t wait for your opposition to take action before you. Specifically, be willing to bid in larger increments to drive the price up. People are more likely to stay in the bidding longer if each increment is only $1,000. Moreover, the lower the increments, the longer you give someone to reconsider their position and jump back into the bidding if they had removed themselves.
Low increments lead to run on bids and more competition which means higher prices at the very least. Make larger increment bids and be sure of yourself when making those bids.
Being Inflexible in Your Bids
It’s highly recommended that you come to the auction with a hard number in mind. A point at which you won’t spend any more money. But at the same time, don’t let your dream home slip away because of $3,000. If you can afford it, allow yourself some flexibility in how high your bid will go.
The best course of action is to set a hard limit, adhere to it as much as possible, but allow flexibility if there is a specific home that really drives to the top of your list. Your ability to be flexible and adjust to the conditions of the auction without falling into the heat of the bidding will allow you a greater opportunity to land the property you’ve always dreamed of.
Bidding at auction doesn’t have to be a stressful experience. Take the time to evaluate the market, determine your budget, and be ready to bid when the time comes. Go to other auctions and see how bidders operate and what the rhythm and flow of an auction feels like. The better prepared you are, the more smoothly your own first auction will be.