Housing market: Auction expert reveals $15,000 trick to scoring dream home

When it comes to auctions, the slightest error can leave you out in the cold. An auction expert reveals the way to score your dream home.

As interest rates tumble and Melbourne and Sydney housing prices begin to rise following the well-documented downturn, buyers are flooding back to the market.

These factors combined with the spring silly season mean bidders are expected to face heightened competition at auctions.

So as you sip on your coffee, forego the avocado and toast — obviously — and plot your approach to land your dream home, buyers agent Meighan Hetherington breaks down the best tips to keep in mind.

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The property expert says it’s vital novice bidders control their ego and don’t let the fear of missing out creep in.

“Having control of your emotions is really important so you’re using your head and not your heart during the auction process,” she told news.com.au.

BODY LANGUAGE

Mrs Hetherington said the mid-auction side-eye to your partner is transparent to your rivals, who will know they have you on the ropes.

“It is an absolute dead giveaway when I see a couple, maybe a family standing together, and they’re bidding confidently until one of them looks sideways at the other and I can tell they’re right down to their last $5000-$1000,” she said.

“Body language and how you actually present yourself to the auctioneers and to the other buyers can put a dampener on other people’s bidding confidence.”

The selling season is expected to be busy this spring. Picture: AAP/ Monique Harmer

OPEN THE BIDDING

Being the first to raise their hand and enter a bid isn’t a common approach in the industry, but Mrs Hetherington says this allows you to set the pace and control the auction.

You don’t want to excite your fellow bidders with a low offer.

“You don’t want to get people in a Mexican wave getting really excited because they think they’re going to get a cheap property, but it can’t be too high,” she said.

“You’ve got to make sure you’ve got some other bidders with you so that the seller can see that they’ve had a reasonably good run of bidders and market value was achieved at the auction.

“That’s important if you have to go into a post-auction negotiation or negotiate during the auction, so you want to make sure that bid is the right one.

For a $1m projected house sale, Mrs Hetherington said don’t start at $750,000 for an open bid because it will encourage bargain hunters and the emotion of the auction will take over, causing the price to potentially blow out.

She said an ideal opening bid for a house or apartment of this value would be between $880,000 to $900,000

“Realistically, a good bidding strategy is to get rid of the bargain hunters but to make sure you’ve still got some bidders with you just in case the owner’s reserve is too high and you need to negotiate,” the buyer’s agent said.

Don’t be afraid to open the bidding.

DON’T SETTLE ON A ROUND NUMBER

When deciding on your maximum bid and seeking pre-approval, don’t settle on a round number because your rivals will and it’s an easy way to shake them off.

“We always make sure that our buyers have at least three bids after the round number,” Mrs Hetherington said.

“So if you wanted to spend a $1 million then we might settle on $15,000 past that so that we can get rid of those $1 million buyers with one or two bids.

“If they say it’s about an $800,000 property, most people set their limit at $800,000. They might go $805,000, but they won’t go $810,000.

“It’s such a small amount, but if you set it upfront then you’re probably going to be successful.”

DON’T HOLD BACK

Mrs Hetherington said she often hears of advice from mortgage brokers or mums and dads to wait until the very end of the auction to enter your first bid.

But she says this strategy only ramps up the emotion and unneeded competition, which ultimately surges the bids higher.

“The best way to be in control to the best of your ability is to be an active participant in the auction and to change up and down the pace of the auction,” she said.

“Make sure when you put the next bid in, it makes people stop and think rather than just emotionally bidding.”

Take the emotion out of the auction and control the pace. Picture: Andrew Henshaw

TALK TO THE AGENT

A real estate agent’s role during an auction is to incite buyers and encourage high bids, but as a house hunter you can use this access to engage the representative to get a better picture of where you’re at.

If you get the chance, you should be asking questions such as: Where are we in terms of the reserve? Are we far off? Are the sellers really committed today? Have they lowered their reserve during the auction?

“If you’re talking to the agent during the auction you can start to get a bit of an idea about what’s happening behind the door with the seller,” Mrs Hetherington said.

“And then if it does pause and there are some negotiations, don’t be afraid to negotiate during the auction. As long as it actually gets the property on to the market and below your maximum price, then that’s a really good strategy.

“Sometimes they’ll pause the auction and seek instruction from the owner and that’s when you want to be talking to the agent, waving them over and to say ‘how far are we away? What would it take to get the property on the market?’

“Once you’ve got that dialogue you’re getting a feel for knowing if you’re only $10,000 short.

“If that’s below your maximum, then put that on the table and then you can see whether you’re going to be the highest bidder or not.

“If it passes in and it was really close to what you would have paid, you go into a blind private treaty negotiation and you can’t see what anyone else is doing.”

Do you have any tips for property hunters heading to their first auctions? Comment below @James_P_Hall | [e-mail]