Preparing for Auction

Attending a real estate auction for the first time can be both exciting and nerve-wracking. The fast-paced environment, the thrill of bidding, and the potential to secure your dream property are all part of the experience. With the right knowledge and preparation, you’ll be ready to participate in an auction with ease.

Apollo Auctions auctioneer, Roger Dawson, has been a full-time auctioneer for over 23 years and has a few tips to make the experience less daunting.

Educate Yourself

Visit other properties going to auction before the scheduled date of the property you like. Learn the strategies that various buyers use – there is no definite “right way” to bid. Watch how some bidders bid strong and quick, in large and small increments. Others take their time and slow the process down with smaller bids.

Work with the agent selling the home or the agent you are working with. They can bid for you with your approval and can often win with their experience. You can also have a relative or friend bid for you if preferred.

Listen to each auctioneer’s style and patter and be aware of the Vendor Bid and why and how it is used.

Set a Limit

Getting lender’s pre-approval to bid is vital. Your bids on auction day will be cash and unconditional. Know your limits and be prepared to miss out on some homes as you gather experience. However, have a little fighting fund just in case, as some auctions are won literally on the last $1,000 or $2,000 bid when another bidder gives up.

Sometimes buyers don’t win an auction until their third or fourth try.

Get Terms to Suit Your Circumstances

Ask for things like a smaller deposit or a change of settlement date if they will help you bid. While the terms of sale call for a 10% deposit, most vendors are agreeable to a smaller deposit. This is helpful for first-home buyers and KiwiSaver buyers who can bid at auction with a lender’s pre-approval.

What if I’m the Only Bidder?

Great! Being the only bidder at auction is a real advantage as you, as a cash buyer, get a head start on those who need conditions. Depending on the state of the market at the time of the sale, as many as 50% of auctions can be won with only 1 bidder.

Be the Highest Bidder

Many auctions don’t automatically sell straight away. Sometimes the bidding slows and will stop mid-auction, and the auctioneer will say something like “I’m not at a level where I can sell the property”. This means they haven’t reached the Reserve Price. Normally they will then check with the vendor, before inviting the highest bidder for a private conversation and ask them to pay the reserve price. At this point, only the highest bidder will get that chance. They can say yes or offer a different amount.

It’s a valuable right to gain, and many auction sales are then successfully concluded as a result of this negotiation.

There are a number of resources available online to offer advice on bidding at auctions. Settled.govt.nz has a great rundown on buying at auction, and Roger Dawson has numerous helpful videos on his website, including one on “buying with confidence at auction”.