An investment property should be all about the numbers, but once you throw in the emotion, action-packed atmosphere of an auction into the mix, even a seasoned investor can find it difficult not to get caught up.
But how do you stay cool at an auction? How do you get the most out of your money? Here we gathered the best tips and tricks from the business!
1. Do your research
It is critical that you understand the market and that you have a precise comprehension on the value of the property you are bidding on. Don’t rely on agent quote ranges, instead attend a number of comparable auctions yourself and see what others are bidding for the same type of property and see what it is actually selling for. Ron from Property Managers Brisbane who has over 10 yrs experience in real estate says research is key to success in the auction game! Brisbane real estate is very volatile and changing all the time so research on latest facts and figures is important.
2. Be prepared to walk away
Anything can change in the blink of an eye link the economy and the property market. Paying too much for an investment property can be a mistake with long-term consequences particularly if the market drops, as it will continue to impact your capital gain. You need to be firm on a price from the beginning and walk away from an auction if the bidding exceeds what you are willing to spend, it’s better to miss out then keep increasing your limit
3. Enlist the support
Having a supportive friend or family member who will help you stick to your guns at auction can stop the temptation of going over budget. Even if they bid for you, and they know exactly when to stop so that you don’t get carried away.
4. Project confidence
You may feel like a bag of bones, but aim to look like a million bucks. Others will be looking at you to gauge how confident you are, if you look confident you will make them think you have all the money to spend. Being confident can discourage other bidders from trying to test you and push you up. At the same time, do be cocky and stir up egos. This will backfire and could potentially fire up other bidder’s competitive spirits so that they are essentially bidding to beat you. There is a fine line between displaying confidence and overdoing it.
4. Prepare in advance
Sit down and decide exactly what you are prepared to pay for a property well before auction day. Don’t work it out on the spot, it can result in irrational decisions. Write down your limit ahead of time and chances are you won’t overpay for the asset.
5. Determine your bidding strategy
There are many ways to approach bidding for your investment property. One good strategy is to be up-front and out there quickly with your bidding. If you start too low you will boost others confidence and have a lot of people competing which can inflate the price.