{"id":8515,"date":"2016-07-12T01:00:59","date_gmt":"2016-07-11T15:00:59","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=8515"},"modified":"2016-07-12T01:00:59","modified_gmt":"2016-07-11T15:00:59","slug":"how-to-win-at-auction-michael-yardney","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/how-to-win-at-auction-michael-yardney\/","title":{"rendered":"How to win at auction – Michael Yardney"},"content":{"rendered":"

 
\nMany home buyers and investors are a little intimidated by the thought of bidding for a property at auction.\u00a0\u00a0 <\/b>
\nMichael Yardney<\/strong><\/a> points out that if you avoid properties that are up for sale at auction, you\u2019re going to miss out on a lot of good buying opportunities as many of the best properties are offered for sale by auction, particularly in Melbourne and Sydney so he has some tips on bidding.
\n <\/p>\n

Transcript:<\/strong><\/h4>\n

Kevin:<\/b>\u00a0 As the auction concept grows in popularity right around Australia \u2013 it\u2019s very well engrained in some of the southern states already, but it is growing in popularity in some of the other states, Queensland, Western Australia, South Australia \u2013 there are still buyers, both home buyers and investors, who are intimidated by the auction process. I guess it can be a fairly daunting process, so let\u2019s give you a bit of a hand.
\nIf you find that that\u2019s what you want to do or that\u2019s what you need to do, here are some great tips. Michael Yardney<\/a> from Metropole Property Strategists<\/a> joins me.
\nMichael, I know that you like auctions. Why is that?
\nMichael:<\/b>\u00a0 Kevin, I believe if you have a good property for sale, auction is really the best way to sell it, and as a buyer, I think auction is the most transparent way to buy property. I can see who else is interested in the property, I can see what they\u2019re prepared to pay. I like to see my competition where I can read their body language, watch the signs that they\u2019re coming close to their limit.
\nI know a lot of people don\u2019t see it that way. I know a lot of people get intimidated by it, and to be honest I still get butterflies when I go to an auction. I think it\u2019s more butterflies of excitement, though, in my tummy than nerves. But I think that keeps me on my edge and makes me work well at auctions.
\nKevin:<\/b>\u00a0 There\u2019s nothing worse than being underprepared, and that\u2019s probably why a lot of people do get nervous \u2013 because they don\u2019t know what to expect, Michael.
\nMichael:<\/b>\u00a0 That\u2019s right. If you\u2019ve done your pre-auction due diligence \u2013 such as getting your finance in place, checking the contracts, determining the maximum price, understanding how the auction works \u2013 then you\u2019re going to be in a much better position to buy well. And if you\u2019re not able to bid yourself, I always think it\u2019s good to authorize somebody else to bid on your behalf \u2013 a trusted friend or probably best a buyer\u2019s agent because that\u2019s their business, Kevin.
\nKevin:<\/b>\u00a0 I guess you can\u2019t discount the amount of research that you need to do to put yourself in that right position to know how far you want to go and what your walk-away price is, Michael.
\nMichael:<\/b>\u00a0 Let\u2019s go through what some of the pre-auction due diligence should be then, Kevin.
\nKevin:<\/b>\u00a0 Okay.
\nMichael:<\/b>\u00a0 I think first of all, you have to understand in which entity you\u2019re going to be purchasing the property. Is it in your own name, is it in a superfund, is it in a trust, is it in a partnership with your life partner or your spouse? And then you have to get finance pre-approval.
\nI believe because an auction is an unconditional sale \u2013 you don\u2019t have a chance to get out, there\u2019s no cooling off period \u2013 you have to have your finance pre-approved and you have to know your budget before you attend the auction. And you have to go with a check or a checkbook \u2013 some people still have those, Kevin \u2013 because you have to actually give money across on the day when you\u2019re successful.
\nI think you should also attend lots of auctions to experience the atmosphere, observe the different bidding strategies. I\u2019d not only be going to the auctions of the company that\u2019s selling the property that you\u2019re interested in purchasing but most big companies have a number of different auctioneers. I\u2019d be watching the auctioneer, specifically the one who\u2019s going to be conducting\/calling the auction \u2013 if you can find out who that is \u2013 because they each have their own particular techniques and words they use, and that will give you a level of comfort if you\u2019re familiar with them, Kevin.
\nKevin:<\/b>\u00a0 Michael, I know doing your homework well in advance is very important. Any other thoughts?
\nMichael:<\/b>\u00a0 Apart from getting the due diligence so that you understand what the highest price you\u2019re prepared to pay or your walk away price is, I\u2019d also be getting a solicitor to check the contracts, and you can organize amendments to the contracts. You\u2019re allowed to, Kevin. You\u2019re allowed to ask for different terms. They don\u2019t necessarily have to accept them.
\nAnd then come to the auction prepared to bid and bid strongly.
\nKevin:<\/b>\u00a0 And on the day, Michael?
\nMichael:<\/b>\u00a0 I like to arrive early. I survey the landscape. I see who else is there. I look to see, are they serious bidders? They\u2019re the ones who look at the contract, they say the right things \u2013 not just the neighbors who are looking at it.
\nI like to stand up front, face the rest of the crowd rather than with my back to them, and I like to look like I have deep pockets, stand strongly and firmly, bid loudly \u2013 I\u2019ll often start very close to where I think the reserve is \u2013 and make my bids in full. I don\u2019t procrastinate, I don\u2019t agonize. My last bid is going to be as strong as my first bid to make sure that I\u2019m not giving away any signs that I\u2019m reaching my limits, Kevin.
\nKevin:<\/b>\u00a0 Michael, what do you do when it passes in or if it passes in?
\nMichael:<\/b>\u00a0 Kevin, I want to be in the position that if it doesn\u2019t reach the vendor\u2019s expectation and the property passes in, that I have first right of negotiation. So I want to be the highest bidder at that point. But I\u2019d never bid even higher to get it on the market because auctioneers will often tell you to do that. The trouble is when you do that, all of a sudden, somebody else comes in and you lose it. I like to be in the position that I negotiate with the vendor.
\nOften they ask you to come inside and talk with them on their turf, and I say, \u201cNo, actually I\u2019d rather stay outside.\u201d That puts them off a little bit. But I stay outside on purpose because I want to see who else is hanging around. Are there other underbidders who are still interested or not?
\nAnd then the negotiation starts all over again, Kevin.
\nKevin:<\/b>\u00a0 During the bidding sequence, good auctioneers are very good at giving a strong inference of sale. In other words, they make you believe even though it\u2019s not at the reserve that it could be and that they\u2019re going to sell it. How do you overcome that? Do you ask them, \u201cHave we reached the reserve?\u201d
\nMichael:<\/b>\u00a0 A lot of purchasers or potential purchasers ask have they reached the reserve, and auctioneers have clever ways of wording it. They won\u2019t say no; they\u2019ll say things like \u201cI\u2019m not going to sell it without telling you.\u201d \u201cYou\u2019ll know when it\u2019s on the market.\u201d So what you have to do is do your homework early and understand when it is<\/i> on the market by hearing the words the auctioneer says.
\nI wouldn\u2019t be pushing it above the price I\u2019m prepared to bid to get it on the market, as I said before. If it doesn\u2019t get there, let it pass in. You then have a despondent vendor and you\u2019re in a better negotiating position. You\u2019re going to negotiate when it passes in with a position of strength.
\nRemember, even in great times, at 80% auction clearance rates, 20% of properties pass in. On average, when the auction clearance rates are in the 70%, 30% of properties pass in. So have a good strategy to work when that happens to you, Kevin.
\nKevin:<\/b>\u00a0 Great advice. Michael Yardney<\/a> from Metropole Property Strategists<\/a>. Thanks, Michael.
\nMichael:<\/b>\u00a0 My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  Many home buyers and investors are a little intimidated by the thought of bidding for a property at auction.\u00a0\u00a0 Michael Yardney points out that if you avoid properties that are up for sale at auction, you\u2019re going to miss out on a lot of…<\/p>\n","protected":false},"author":176692471,"featured_media":8518,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,10,11,13,36,25],"tags":[101],"class_list":["post-8515","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nHow to win at auction - Michael Yardney - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/how-to-win-at-auction-michael-yardney\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to win at auction - 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