Auctions remain one of the favoured ways Australians choose to sell their homes. In Victoria alone, weekly sales and auction results reveal this. In mid-march of 2020, for example, out of 1,054 sales and auctions results, 561 of these (over half) homes sold are done so at auction. The success and potential for property auctions to deliver results for vendor and bidder alike points to their popularity, and spark a number of techniques bidders use to try to control the final bid. ‘How to slow down an auction’, ‘bidding techniques’, ‘auction tips’ all remain popular questions people have, and for good reason.
When deciding between selling privately or at an auction remember that auctions have the potential to drive up the price of a property much further than a private sale can, due to the various psychology of auction bidders, especially the effect that being in a crowd can have on a bidder.
There are two main ways bidders will try to control an auction and point it in a direction that suits them. The first is to either go in hard and strong at the start or to wait until the end stage of an auction to make their bid. This means that they either have little influence on the timing of an auction or can actually speed the auction up by pricing potential bidders out of the auction immediately. This can be a great auction technique and projects confidence and scares potential bidders away, with the result of keeping the price down.
The second technique is to slow down an auction. Slowing down an auction is a tried and tested technique that can halt the rhythm of an auction and potentially slow down or stop what is often referred to as ‘auction fever’, where a crowd might feed off itself and start accelerating the rate of bidding, which vendors love for good reason.
Rob Flux from the Developer Network says that having a clear idea of the property’s true value helps to keep cool and control the auction’s momentum.
“The key thing is to understand the actual value of the property and not become emotionally invested. It is then easy to understand the maximum price you are willing to go to.”
There are a few ways to slow down an auction, but you need to be careful that you are at no point ever disrupting an auctioneer’s ability to conduct an auction, as this can be illegal.
Bidding early at an auction
Bidding early at an auction can have the effect of slowing an auction because you can eliminate a number of bidders from the auction who may not be that committed to the property but who can potentially influence the speed of an auction and contribute to ‘auction fever’.
Tom Penfold from Penfold Property Buyers in Sydney gauges the interest in a property before deciding how to bid.
“I will turn up 10 minutes before the open and watch how many people register,” says Penfold. “A good general rule that I use is that if there are more than five registered bidders, I’ll open up aggressively to remove the bidders who are not the real competition.”
Removing those early bidders means fewer hands in the air and less excitement in the crowd, it also projects confidence towards remaining bidders, potentially slowing down their own bidding.
Using odd numbers to slow down an auction
Using odd numbers is one of the most popular ways to try to slow down an auction, and one of the easiest ways to annoy an auctioneer. Use it too much and you are at risk of disrupting the auction, so be specific about when you do this. Assess the rhythm of the auction and identify that point where bids are reaching your limit and might be building on their own momentum.
At this point, break up the bidding down to a smaller increment, especially one that requires an auctioneer to do the math to figure out where they are up to. Even if they reject your bid to keep the increment higher, it will still have two effects: slowing down the auctioneer’s attempt to build momentum and communicate to bidders and onlookers that the auction may be reaching its limit and about to slow down, having the effect of slowing down other bidders.
Asking questions at an auction
Again, you can’t take this technique and distort it to the point where you are at risk of being accused of disrupting an auction, but asking questions can be an effective and subtle way to slow down an auction. Questions must be related to the auction process, not the condition of the property, of course. For instance, asking whether the auctioneer will accept a smaller bid or enquiring whether the property is near reaching its reserve price are two popular questions.
Whatever technique you apply, do so reasonably and without the intention of actually disrupting an auction and remember that this is all about influencing the rhythm of an auction. It is a good idea to only apply a technique once in an auction, because that may be all you need to keep the horse from bolting and the price from getting away from your limit.