An insider’s tips to your first auction

Your first Auction

The first auction you go to can be overwhelming and feel like a lot is happening at once.
Knowing the basics before you get there is the key to understanding what’s going on,
what to do, and preparing for the time you may be bidding yourself.

Ash Brown, director at One Agency Orange, is a licensed auctioneer with loads of great
tips about auctions. He’s all about giving you relevant information and walking you through
the details so you know up front what to expect and feel comfortable with how real estate
works. 

Before the auction

If this is a property you want to bid on, you need to do some homework before the auction. 

“It is important for buyers to be well informed. You should inspect the property, get a building inspection done, and research recent local prices for similar properties so you have a clear idea of what the property is worth in the current market..” 

Ash Brown – Licensee in Charge, One Agency Orange

If you’re ready to buy, you’ll need to have had the conversation with your bank or mortgage broker about whether or not this property is within your budget. A conditional approval or pre-approval is a big plus because it means you’ll be going into the auction confident about what you can afford and know what your bank will lend you. You also need to discuss with the agent how you’ll be paying the deposit if you are the winning bidder. 

If you want to bid, make sure you bring your ID with you because you’ll need it to register as a bidder. 

When you arrive 

Not all auctions take place at the property. Many do, but they can also be an ‘in-room auction’ which is held at another location and usually includes other properties being auctioned that day too. The auction process is the same wherever it’s held. 

If the auction is at the property, you’re welcome to take a look around as it will be open to the public. 

If you plan to bid, head to the registration desk to fill out the paperwork, show your ID, and collect your bidding number. 

The organisers will call everyone when the auction is ready to start. 

How to bid 

A first-time bidder is bound to be a bit nervous, but don’t worry about that. It’s easier than it seems once you’ve seen an auction and understand the process. 

Take a look around and see who’s there. Who’s holding a bidding paddle or card? Are there family groups who may be bidding for someone else? Get a feel for the room. It’s amazing how much information you can get from body language before the auction starts and also when it’s in full swing. Talk to the person or people you came with and see what their impressions are. Taking time to do this gives you essential information about your competitors. 

The auctioneer will begin by describing the property and giving the auction guidelines, then ask for a first bid. It’s quite common that this is followed by silence. That’s okay, it can be a buyer’s tactic to wait and see who else wants to buy the property. It can also happen that a keen buyer jumps in quick with a confident first bid to show they mean business. If no bid is made, the auctioneer may call for a “vendor bid” to get things going. This is a figure that’s already been agreed on by the agent and the seller to kick off the auction. 

Once that first bid is in, you’ll find things move quickly. If you’re bidding, this is where it pays off if you’ve been to at least one auction already and can follow what’s happening. The auctioneer will either suggest the next bid, call for another bid, or take a bid if someone calls it out. All bids must be done by raising the bidding paddle or card high enough for the auctioneer to see the number on it. If the bid is accepted, the auctioneer will call it out. An assistant writes it down along with the number of the bidder. A bid won’t be accepted if the bidder’s number can’t be seen. If you bid, make sure you do it confidently but not too excited. We know it sounds weird, but practicing this at home a couple of times before you go to an auction where you want to bid is a great idea! 

The early bids will rise in large numbers, such as increments of $100,000 then $10,000. As the top bid gets closer to the market price, the auctioneer will take bids in smaller increments but generally won’t accept them early in the bidding so they can get the bids up to where the property is “on the market” which means it’s reached the seller’s reserve price – the minimum price they’re willing to sell it for in the auction. When Ash auctions a property, he will make this known by calling “This property is ready to be sold” but not all auctioneers will call that out. This reserve price is rarely disclosed before the auction. 

A keen buyer will often make themselves known early in the bidding. Once the auction is underway, it’s useful to look at who’s bidding to get a feel for how the auction may progress. Are people talking to each other, is anyone shaking their head? Who else has a paddle or card but hasn’t bid yet? See what you can discover about the bidders and their intentions from their behavior. 

Vendor bids 

A vendor bid can be made at any time in the auction, and usually comes in if the bidding stalls. For example, if the bidding started at $580,000, the reserve price is $640,000 and bidding has stalled at $630,000, the vendors may signal to the auctioneer to place a bid on their behalf of $640,000 to get the price closer to what they want. If this doesn’t get the bidding going again, then the auction ends and the property is “passed in”, meaning no sale has occurred. 

Passed in or sold 

Once the final bid is made, the auctioneer will either bang their gavel and call “sold” or they’ll announce that the property has been passed in. 

If the property has sold, the person who placed the winning bid will sign the sale contract and pay the deposit. 

If it’s been passed in, then the highest bidder – and sometimes the second-highest bidder too – will be invited to negotiate a price with the vendor. If they agree on a price then the property is sold. If not, then it’s up to the vendor to re-evaluate their sales campaign with their agent. 

Other things to know 

During the auction, you’ll see the property’s agent talking to bidders. They’re getting a feel for whether those people are still in the bidding and what their top bid may be. 

Bidders will drop out, even if they were bidding hard at the start. This could be because they hit their top bid or they think they’re going to be outbid and aren’t keen to compete. Other bidders, though, will use a tactic where they hold off then come in with big bids once the auction gets to a realistic market price to move the bidding suddenly into where it can be sold. 

Talking to your local agent is well worth the time, but make sure you pick one who knows real estate in Orange and has had auction experience. Ash and all the One Agency Orange team are happy to share their experience with you and answer any of your questions or give you accurate data relating to your property search. There’s no obligation, just give us a call for a friendly chat about what you want from the real estate world. We’re here to help. 

You can check out One Agency Orange’s short Armchair Open videos on our Facebook page where Ash will walk you through our latest properties or come and meet the team in person at our office in Summer Street. We’re Orange’s friendliest and most energetic agency. Our service is all about making your real estate experience as stress-free as possible.