While private sales of houses remain a significant portion of property sales across Australia, selling at auction is an increasingly popular method favoured by both vendors and buyers alike. However, there is one factor in a property auction that never changes: the vendor is very rarely in sight (often inside the home, listening to the auction take place), while bidders are huddled in a crowd, competing with one another. The alternative to battling it out in the crowd, with all the stresses and considerations this entails, is to make a bid over the phone at a property auction.
There is a range of techniques for bidding at an auction, including bold early bids or bidding late. But bidding over the phone at an auction may be the ultimate technique as it allows for a number of advantages to come into play.
Why would you want to bid over the phone at an auction?
There are a number of reasons why you might want to head down this route:
- Bidding by phone separates you from the auction, physically speaking, so that you are not as emotionally affected by other people and the environment or vibe of an auction. This separation from the auction reduces the risk of you making any emotional decisions, and as such overbidding and overcommitting yourself to a property. It also saves you from any distractions you may experience when bidding in person, such as other bidders’ bidding techniques.
- If you have multiple properties that you are interested in, you don’t have to sacrifice on the opportunity to secure one over the other. It can often frustrate potential buyers that they have two auctions on the same day within a short time frame, such that they can’t physically get to the second auction if they aren’t able to secure their first auction. Bidding by phone allows you to potentially place two stand-in bidders at both (or more) auctions, allowing you to improve your chances of securing a property that interests you.
- You can talk to your stand-in bidder, such as a buyer’s agent, over the phone who can give you advice. There are many advantages to employing a buyer’s agent but the one that most applies here is that buyer’s agents have years of experience bidding at auctions and negotiating private sales. They are the only person you want representing your interests when it comes to such a major financial decision.
- You can invest in properties interstate by bidding by phone at an auction, saving you a lot of money on travel and accommodation.
There are, of course, disadvantages to bidding by phone, mainly your disassociation from the auction and the fact that you can’t read other bidders intentions apart from what your representative tells you. But if you are new to auctions and don’t feel sure of your ability to either secure a high bid or to limit your bids to your budget, then bidding by phone can be a strong option.
How to bid over the phone at auctions
Be aware of what auction rules you need to follow across various states, as some states require the bidder to register and you may have to supply permission and proof of identity in some states for having a stand-in bidder.
Research buyer’s agents and interview them for the job. Treat it just like a job interview, asking about their previous experience and how they approach their role, but also look at how you and they communicate. Having good communication with this person is vital to the success of bidding by phone at auction, as you rely on them to effectively communicate the nuances of an auction, such as what bidding techniques others are employing, and providing you with their own suggestions as to what you should do. You also need to have be able to communicate how you feel in regard to what is happening and what you want them to do as your representative. You will know when you have a strong connection with your representative, as conversation will flow easily and you will feel confident that they will have your best interests at heart. A good buyer’s agent realises that this is the biggest financial decision of your life, so will be monitoring and aware of your own emotions during the process, and will help you make smart decisions right at a time when you are probably most likely to be led by the heart, not the head.
If you are the highest bidder but it passes in, you can negotiate by phone via the agent. If you are successful, you will fulfill the process of payment you established when registering your stand-in/buyers agent. You may transfer funds to an agency’s trust account or authorise the agent to fill out a blank check that you have signed. It’s up to you whether you want to enter physically at this point, but you can elect the agent to sign on your behalf.