Property auctions are big moments. A lot of money will be spent in a very short amount of time. But even more than that, if you’ve seen a property you really want then there’s a lot on the line emotionally too.
You're going to be up against steep competition on auction day though.
So how do you stack the odds in your favour, and give yourself the best chance of succeeding at auction?
Ultimately, the highest bidder on the day is going to win the auction. But there are a number of things you can do before and during the auction which may give you an advantage. These things can improve your chances of winning, and could also help keep the price down.
In this article we’re going to cover two main things:
First, we'll cover key preparations you need to make on auction day.
Next, we’ll cover the bidding strategies you could use to give yourself an advantage.
1. Set yourself up for success on auction day
There are a few things you should do practically and mentally to set yourself up for success on the day.
1.1. Practical tips for auction day
- Make sure you have everything you need. This includes proof of your deposit, and 2 pieces of ID (usually 1 piece of photo ID like a passport, and 1 "proof of address" piece like a utility bill).
- Get there early. Find somewhere you're comfortable with - especially if it's your first time. You want to be easy for the auctioneer to see, but it's worth having a good spot just ready to ride the day out as well. Auctions can last a long time... Being stood up at the back for 3 hours waiting for your property isn't going to be much fun.
- Have your "ideal" and "maximum" prices in mind. Remember, you should have your ideal price, and your maximum price. Don't just show up on the day and wait to see how you feel! Have those prices fixed in your mind beforehand... And be prepared to stick to them.
- Bring a partner. On the subject of sticking to your price limits, it can be worth bringing a partner with you. They can hold you accountable, and talk you out of exceeding your limit in the heat of the moment.
- Dress... suitably. Some websites will tell you to show up dressed to the nines so everyone knows you mean business. In. theory, this means they won't fancy their chances against you and may back down sooner. But other websites suggest showing up in your scrubs so that others underestimate you. To be honest, I don't think there's much to gain either way. If you're employing a certain bidding strategy then dress suitably for that. Otherwise, just wear some clothes.
- Leave the family at home. Although bringing a partner can be beneficial, bringing the whole family probably isn't. For one, it shows other bidders that this is a novelty for you. This can make it easier to "bully you" in the bidding if they know you're a newbie. But secondly, families will add a lot of emotion to the situation. You need to calm and rational in your bidding, and bringing a personal audience doesn't help with that.
1.2. Preparing your mindset for the auction
This section may sound a bit wishy-washy, but it's important. Get your mind right before the auction!
Here are the TWO KEY THINGS you need to know:
1. Keep calm, be rational.
The auction process has been developed over literally thousands of years to make you pay more than you want to.
It's unbelievably effective at doing that. This means you really need your guard up:
- Stay calm.
- Don't get carried away.
- Don't get competitive.
- Don't get personal.
- And don't get emotional.
If you let any of those things creep in then you may end up with an outcome you really didn't want. Remember, there's no backing out after the auction, even if you regret your decision.
2. If you don't win, that's a win.
Here's the mindset shift you need to make to be successful at property auctions:
You're not going to the auction to try and "win" the property. You're going there to see if you can buy it at a price you're happy with.
In other words, if the bidding goes above your max price and you don't bid, that's a win:
- You wanted to buy the property at your ceiling price or lower.
- It wasn't available at that price, and you walked away.
- That's the outcome you wanted. So you won.
Don't get competitive and try and "win" the property. That's totally the wrong mindset! Winner's curse is a real thing, and if you let yourself get carried away you may end up with a real financial burden that you live to regret.
Don't win for the sake of winning. Have confidence in the valuation work you did, and stick to your guns.
2. Bidding Strategies: How to bid on a house successfully
How do you maximise your chances of winning an auction?
At the end of the day the highest bidder's going to win. But there are a number of bidding techniques and strategies you can use which can boost your chances of winning. You can also use them to manipulate the bidding process, which can potentially help to keep the price down.
Let's get into bidding tips first (which will almost definitely help you), and then bidding strategies (which, frankly, may or may not help you!).
2.1. Property auction bidding tips
1. Keep a poker face
A nervous or emotional auction bidder is going to give off certain cues. This can either be through their bidding pattern or behaviour. An experienced buyer can pick up on these, and may even be able to use it to their advantage.
This is why it's really important to keep your cards close to your chest.
This doesn't just apply to your bidding either: If you see an exciting way to add value to the property, don't get into conversation with other auction-goers and let them know your ideas. If, by coincidence, a rival bidder is party to your conversation and you reveal an opportunity they may have missed, they may increase their ceiling price. This means more competition for you.
Maybe it is, but why tip your cards? It's a big event and money's on the line. Keep your cards close to your chest, and try not to give anything away when you're bidding.
2. Bid confidently
In the same vane as keeping a poker face, make your bids confidently.
Even if the price is rapidly approaching your ceiling price, or if you're really stretching yourself to make the bids, don't let the other bidders know.
If they can see the end's in sight for you, it may persuade them to keep going just a little bit more and try and outbid you.
If you're confident and they get the impression you'll just keep going, they may be more likely to just back out of the race sooner.
3. Feel free to slow the tempo
Remember that the auctioneer works for the home seller - not for you. It's their job to make everyone get carried away, and sweep you up in the momentum of the auction.
When they do this, the price can really run up quickly. For example, if bids are in £10,000 increments then the price can go up by £100,000 in no time at all.
It's not just the price rise that's a concern though. It's the momentum. When all the bidders get in the swing of making big increments quickly, the momentum can continue.
It's a good idea not to get wrapped up in this.
Feel free to leave longer pauses before bidding. Or go even further and refuse to bid. This can help force the auctioneer to reduce the bid increment, and start accepting smaller bids. This can slow the tempo, and lead to a lower overall selling price.
(Use your judgement here though. A few weeks ago I watched an auction on a property that eventually sold for over £1.2m. The bidding went up in £2,000 increments from £950,000! It took forever! So use this method strategically... Not just to waste time!)
4. Be calm and rational
This is one of the most important tips. I've tried to drive this point home throughout this article: Set your ceiling price, and stick to it.
Stay calm as you're bidding, and don't get swept up in the action. Stick to your ceiling price.
5. Be first to certain milestones
This is a little tactic that can make a difference - especially with online auctions.
Say you're going up in £1,000 increments, and the bidding looks like this:
- Their bid: £96,000
- Your bid: £97,000
- Their bid: £98,000
Naturally your next bid would be £99,000, and theirs would be £100,000. But big round figures like this are often the price limits people set.
So if they get the £100,000 bid and that was your limit, then you can't outbid them - even though you'd have been willing to pay the same price.
So, where possible, try and take those milestones yourself. In this instance the ideal would have been to make a £2,000 jump, so you take the £100,000 bid.
2.2. Property auction bidding strategies
So we've covered bidding tips that everyone should use. But what about your overall strategy?
- Should you bid at the start?
- Should you wait until the end?
- Should you make big bids to scare others off?
- Or small bids to try and keep the price down?
There are a few different strategies I've identified for you (and named appropriately). Let's get into them.
1. The steady march (bid throughout)
One tactic is to make the first bid, and be a constant fixture throughout the auction. You can even go as far as placing every alternate bid.
- Other bidders see you there from the start, and may think you've just made your mind up and are having the house at any cost. This can make them give up sooner, and just leave you to it.
- On the other hand, constant and regular bidding like this can help the auction gain momentum. Others can get swept up in this too, and it may lead to a higher final selling price overall.
2. The plodder (constantly slowing down)
A similar method is to be like that "steady-marcher" by bidding consistently... but the plodder just does it really slowly. You try and take the steam out of the auction room at every chance you can get.
- Slow bidding can help keep the eventual price down by not letting the auction gain steam and really "run away".
- If there are a couple of other people bidding against each other, the price is going to keep running up whether you're bidding or not.
- Even if you're only against one person, bidding slowly doesn't affect their ceiling price. If it's higher than yours they'll still end up buying. It'll just take a few more minutes to get there.
- The auctioneer's probably going to tell you off, and you'll probably irritate the other buyers in the room!
3. The show stopper (enter at the end)
This one's about staying totally out of the picture, but coming on stage for the finale. Just as others have lost steam and things seem to have settled, you start bidding and try to eliminate the final bidder this way.
- Can be a psychological hit to the other bidder: Just after they think they've won, they realise they have another bidder to contest with. They may be more likely to just "give up" rather than keep pursuing you.
- You probably won't end up bidding until things get to a fairly high price, and you may not even get the chance to bid at all.
- You lose the opportunity to put your stake in the ground and make an impression on the other bidders early on.
4. The one hit wonder (one big bid at the end)
This is similar to the "show stopper" in that you're waiting until the end, but the difference here is that you're just making one big bid at the end of the auction.
If the increments have been down at £500 as the auction slows down, you come in with a big bid of maybe £5,000. The hope is that you just turn the others off from competing by coming in with such a leap so close to the end.
- This can be really successful if the others are losing momentum. As they're slowing down, you make a huge leap forward. They may feel like they aren't going to be able to keep up, and they just drop out.
- Making a big jump may be unnecessary. Maybe your rivals are only £1,000 from having to drop out themselves. By coming in with a big leap you may be overpaying.
- If your "big hitter" bid is less than your competitors' maximum prices, they'll still just outbid you.
- Can be difficult for in-room auctions, where you'll sometimes only be able to bid at the auctioneer's current increment. Of course, there's nothing to stop you shouting your bid out. Most auctioneers will still take it.
What's the best bidding strategy?
After reviewing all these, I'm not convinced that one will really help you a great deal more than any other. I'd certainly suggest following the bidding tips from earlier on in this article, but when it comes to the actual bidding strategy it's up to you.
I'd definitely recommend trying to break momentum to try and stop everyone getting carried away. I can see that this could give you a better overall chance of winning, by not letting other bidders lose their heads and overpay.
But even at a slower pace, people may lose their heads from the sheer competition (or even from the tension of having to wait so long because of the slow bids). There are just arguments for and against, however you want to approach it.
To be honest I'd recommend just picking whichever strategy stood out to you, and going with that. The more important thing is probably just to stick to your plan - whatever that plan is.
Follow the bidding tips outlined earlier on in this article:
- Figure out your maximum price and don't exceed it.
- Get your mindset right (don't just try and win for the sake of winning).
- Keep your cards close to your chest, and maintain your poker face.
But when it comes to bidding strategies, I don't think one's any better than another. Just decide on your plan before the auction, and stick with it.
All in all, the best way to find property auction success is to do your due diligence, be prepared, and walk away if the price exceeds the limit you set beforehand.
By Matthew Cooper, Co-Founder of Home Selling Expert