How to Bid at Auction in Brisbane – 7 Mistakes to Avoid!
Every weekend our Team of Brisbane Buyers Agents attend auctions around our city. We often see buyers make big mistakes at Brisbane auctions, which is why we wanted to write this article about how to bid at auction in Brisbane, to give buyers a better understanding of the process. The purpose of this article is also to provide some hints and tips in relation to the auction bidding process when buying a home or an investment property in Brisbane.
So, what are the biggest mistakes to avoid and how to bid at auction in Brisbane? We have summarised these under 7 categories as outlined below.
Mistake #1 – Talking to the Agent about price prior to the auction
During an auction campaign, Sales Agents will be looking for as much price feedback as possible from the prospective buyers for a property. This helps them to guide the seller in relation to their expectations on auction day. There are a number of ways in which they will attempt to collect this information including:
- Encouraging buyers to submit a pre-auction offer;
- Asking buyers where they see value in the property;
- Asking buyers if they believe this property is superior or inferior to other recent sales in the area.
In Queensland, Sales Agents are NOT required to provide a quote range which is different from how auction campaigns are run in other states. In fact, there is often no price guidance provided at all, and therefore it is up to the buyer to do their own price research.
Buyers can ask an agent to provide a list of comparable sales for the subject property, however, please be aware that a list provided by a Sales Agent who represents the Vendor can sometimes omit recent sales that might be at a lower level. The comparable sales list can be used as a price conditioning tool for buyers so even if buyers are looking at any comparable sales provided by a Sales Agent, it is important that they also do their own research to ensure the list provided captures all recent sales and not just those at a higher price point!
TIP: Do your own price research PRIOR to auction day and do not disclose information about the price to the Agent prior to bidding!
Mistake #2 – Not completing all required due diligence prior to auction day
When purchasing a property under auction conditions, it is an unconditional sale, so all of the due diligence must be performed upfront. Due diligence to be completed should include the following (as an example):
- Property Due diligence – this includes a thorough discovery process of checking flood maps, noise impacts, underground services, nearby developments etc
- Contract Review by a Solicitor – it is important to understand the terms and conditions that you will be bound by if you are the highest bidder on auction day;
- Building and Pest Inspections – understanding the condition of the building and identifying any major issues with the building structure due to damage or pest infestation is critical;
- Inspection of Body Corporate Records (where applicable) – finding out if there are any issues with the property that have already been identified, but not yet repaired is important as well as having clarity over the body corporate by-laws. A thorough inspection of past records by a solicitor is advisable.
TIP: It is also a good idea to do some due diligence on the auctioneer so that you are familiar with their style and approach. Every auctioneer is a little different, but having some understanding of the language they use and the techniques they implement to encourage buyers to bid strongly can help property buyers maintain control on auction day.
Mistake #3 – Admitting Inexperience
Admitting to the Agent or Auctioneer that you have never bid at auction before can work against a property buyer and is not how to bid at auction in Brisbane. Not knowing the rules around how Queensland auctions must be conducted can be a disadvantage to buyers who may be bidding for themselves for the very first time. Inexperienced bidders can often make these mistakes whilst an auction is underway:
- Asking how much they can bid because they don’t understand what the bid increments could be;
- Asking if the property is on the market;
- Assuming if the property passes in and they hold the highest bid, they will have the exclusive right to renegotiate;
- Assuming that a vendors bid is the same as a registered bidder’s bid;
- Changing their bid limit due to the hype on auction day;
If an Agent or an auctioneer sees that a buyer is inexperienced, they can often draw out higher bids in the absence of other competition. We have seen this happen often throughout Brisbane. And quite often the buyer is not even aware that this is happening!
TIP: Our best advice for those who are inexperienced is to learn all about the process, or alternatively, get professional assistance!
Mistake #4 – Not wanting to bid until the property is announced on the market is not how to bid at auction in Brisbane
This is a very common mistake! If there are multiple registered bidders, and everyone is waiting for the property to be announced on the market, it may never reach that level.
Property buyers need to have confidence in their pricing of a property so that they know where the value sits and work with the auctioneer to get the property on the market. Otherwise, the property will simply pass in, and then not only will auction bidders have a right to submit an offer, but it will also open up to other buyers who may not have the capacity to bid under auction conditions – thus creating more competition.
TIP: If you are there to buy – have a bid! Don’t wait for the announcement to be made that it is on the market.
Mistake #5 – Engaging a Sales Agent to bid on your behalf by phone
This is a very common thing in Brisbane. It occurs when buyers may not be able to attend the auction themselves, so they have a representative from the Agency who is selling the property (and therefore representing the vendor) to take instruction over the phone during the auction event.
Whilst this is a free service provided by most sales agencies, there are several issues for buyers who take this option. These include:
- Buyers have no visibility of other bidders and their body language
- Buyers often only hear what the agent is telling them on the phone and they may not be able to hear other bidders or the auctioneer
- The Agents on the phone are aligned with the selling agency – engaged by the seller to get the best possible price!
TIP: When buyers can’t attend themselves in person, a better option is to engage professionals who will have a buyer’s best interests at the forefront when bidding. A Buyers Agent can provide this service so a small fee, which often includes some guidance in terms of price and sometimes some property due diligence as well.
Mistake #6 – Letting emotions blur good judgment
The excitement of an auction can often cause buyers to make last-minute decisions. Fear of missing out can kicks in, leading to overpaying.
When buyers are approaching their limit, body language often paints a picture as well. Emotions can cause buyers to “wear their hearts on their sleeves” and professional bidders will often get insights into other buyers when they are approaching their limit.
TIP: It is always important to have a set bid limit in mind PRIOR to auction day and never let that bid limit be a round number! Instead set an odd number as the bid limit and stick to it on auction day!
Mistake #7 – Neglecting to arrange finance prior to bidding
This seems obvious, but it is still something that a lot of buyers don’t get ready early enough. Being finance ready as a buyer when you are in the market to buy is important, but it is essential if the property is being sold by auction. There is no finance condition on an auction contract, so unless you have finance approved, you will be unlikely to have the confidence to bid to a pre-determined purchase limit.
TIP: Regularly speak to your bank or mortgage broker whilst you are searching for your property, because borrowing capacity may change from time to time (especially in a changing interest rate environment). This way, you will have confidence in your capacity to buy the property you are aiming for.
This guide on how to bid at auction in Brisbane has covered the common mistakes we see bidders make at auctions throughout our city. We always recommend property buyers seek professional assistance if they are unsure about the process of buying at auction, or if they are not confident. For a small fee, you can get professional input to ensure you are in the best position to buy your home or investment property without overpaying, and without succumbing to some of the mistakes we see lots of other property buyers making. Price is what you pay, value is what you get and for this type of service, there is a lot of gain from a partnership with professionals like us.