14 Sep 2018 By WengYee Loke
As the saying goes, ‘fail to prepare, prepare to fail’; it is beneficial to have a game plan before bidding on auction property. There is much more to bidding than having the deepest pockets.
Of course having an unlimited amount of funds would guarantee a win. But you’re not here to win at “who spends the most”, you’re here to implement a plan/vision for the house or land that you want, and buying for a good price is critical to that plan.
Whether it’s a ground rent investment, a large piece of land with planning potential or a development opportunity, some auction properties will be more popular than others. In instances like those, it would help to be strategic with how you bid. A well placed/timed bid could stop competing bidders in their tracks.
Everyone has their preferred bidding tactics. But here are some common strategies we have observed.
One large strategically placed bid can help stamp out the competition. It gives the impression that you are not afraid to make your mark. It doesn’t have to be a significantly larger amount above the guide (as you don’t want to be overpaying) but bidding your absolute highest amount does make people think.
You may not want to draw attention to a specific lot but being an early bidder could be advantageous. Make your presence and interest known to other bidders by placing the first bid. Some bidders will not want to get into a bidding war so making an early bid could put others off.
We have even seen a bidder placing a bid at 3am! Probably in hopes that it’ll slip past other interested parties and have a nice quiet win. Of course this is only possible with online auctions since they run 24/7.
A strategy for those with patience (and potentially deep pockets). With many popular auction lots, there can be a flurry of bidding activity at the start of the auction. As the price rises, the number of interested bidders will drop.
This strategy is for those who don’t want to be actively bidding against many other people, but waiting until it’s only a few bidders left. If there is only one bidder left, it may be easier and quicker to win the property. However, you run the risk that the price has risen higher than you’d hoped.
If the property has not met its reserve when the timer reaches zero, it has not sold. There are individuals who are hoping that the reserve isn’t met as they want to do a post-auction deal. With online auctions, it’s less likely that this will happen, so don’t wait - bid!
Bear in mind the differences between starting prices, guide prices and reserves - the reserve cannot be more than 10% above the guide price, so that should give you a good indication of the sellers price expectations.
Unfamiliar with how the guide and reserve price differ? Take a look at one of our earliest blog post explaining the difference. Guide price vs. Reserve price
If you do see that a property has met the reserve, it’s best to get your skates on and bid or you will miss out. On the Bamboo Auctions platform, we have a reserve met indicator which turns green (another advantage of bidding with Bamboo Auctions).
Most bidders will have a upper limit that they have set for themselves. Many times this will be a nice round number such as £100,000 or 250,000 etc. If you are the one who bids that round number, chances are you’ll knock out your competing bidder. So - think about engineering your bid so that you’re the one who bids the round number.
Bidder 1: 95,000 Bidder 2: 96,000 Bidder 1: 97,000 Bidder 2: 98,000 Bidder 1: 100,000
In the example above, Bidder 1 and Bidder 2 have the same maximum amount. Bidder 1 has jumped the increment so that they have bid the popular maximum amount. As Bidder 2’s maximum was also 100,000, Bidder 2 won’t bid again, as the next possible bid is 101,000. So Bidder 1 wins.
To counter this, bidding with an unconventional maximum amount in mind could also help knock others out of the game. In the example above, if Bidder 2 had a maximum of 101,000, they can put that vital last bid in, that might just win the property.
When bidding with Bamboo Auctions, you can change the amount you would like to bid. There might be a minimum bid increment but feel free to increase this increment as you choose.
Seasoned auction goers might change tactics depending on the popularity of the lot and what fellow bidders are doing. Coming up with a plan before placing a bid is crucial to keeping your head clear. A competitive atmosphere can make people bid far more than they had planned to (nobody likes losing). However, a solid strategy and a set limit can prevent you from getting carried away.
Good luck!
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