If you are purchasing a home in Melbourne in 2021 (or 2022) it’s likely you’ll need to know how to bid at an online auction. Taking away the drama of the in-street auction changes the playing field somewhat—so it’s important for you to understand how online auctions compare with traditional property auctions and how to adjust your bidding strategy for the online environment (and use it to your advantage).
Even though restrictions are easing in Melbourne, it’s possible that online auctions will be here to stay for some time. So if your dream home or ideal investment property is selling via online auction, it’s vital to know how to bid at online auctions.
Go to a few auctions beforehand
The sale of your dream home should not be the first online auction you attend. Instead, register to attend a few online auctions, so you’re familiar with how it works. Ideally, these auctions will be with the same real estate team selling the property that interests you. But if that’s not possible, attend two or three auctions from agents in your area to get a feel for how it works.
Prepare by speaking to your agent
Over the past 18 months, we’ve attended and bid on several property online auctions. The good news is that agents have finessed their process over that time. Agents want you to be confident and bid freely, so they can get the best possible sale price. Each agent will stage their auctions slightly differently. Agents don’t want any bidders feeling unsure about the process so simply ask them how it’s going to work. Of course to attend the auction, you will need to register with the agent and they’ll send you the link to participate as a registered bidder.
Online auctions differ from traditional street auctions
The process is mostly the same, but we find it is less dramatic. A typical street auction will start slowly, then escalate into heated bidding. Online auctions tend to be more evenly paced. At the onset, in most cases bidding begins faster than usual. But it tends to stay at a level pace, without the drama of frenzied bidding that a street auction can incite towards the final sale. People are there to get stuck into the auction, and so be prepared for the bidding to start at a higher rate. So be prepared to bid strongly from the onset.
Which old auction rules no longer apply?
Knowing how to bid at an online auction means preparing a good bidding strategy. Unlike traditional auctions, where there is a bit of a lull before bidding heats up, some online auctions tend to start quickly.
In traditional auctions, the auctioneer typically stops the bidding halfway to ‘converse with the vendor’ then disappears inside. The auctioneer then returns to announce the bids have passed the reserve and the home is now on the market. This is when bidding really heats up. With online auctions, the auctioneer tends to simply declare when the bidding has passed the reserve and continue the auction without the break in proceedings.
Understand the technology
Auctioneers may use bidding software, like Anywhere Auctions, or perhaps Zoom or Google Meet to conduct the online auction. It’s important you familiarise yourself with the technology beforehand. You can bid in two ways, by unmuting yourself and calling out your bid, or by entering a bid into the chat. We prefer to bid by voice, as it’s quicker than typing into the chat — and you won’t have a chance of a typo mistake.
Auctioneers will use your name
Unlike street auctions, auctioneers can use bidder’s names. Instead of the person ‘over yonder by the tree’ the auctioneer can call out to you by name. So there’s no hiding behind anonymity. If you plan to be an active bidder, you need to enter your real name online — agents will ask you for it. During the auction, they might ask you how you’re progressing, by saying something like, ‘Hey Carly, are you in or out?’ So be prepared to be addressed directly during the bidding.
Be prepared for tech failure
Just in case your wifi cuts out, have your agent’s numbers punched into your phone and ready to call. If anything goes wrong, you don’t have to waste time rushing to find their number. You’ll be able to quickly re-enter the online auction by phone if your wifi plays up at the crucial moment.
Have your video on
Typically agents will ask every active bidder to leave their video function on, some auctioneers will invite everyone else to turn off video. This allows the online auctioneer to concentrate on the bidders. Catching a bidder online tends to be slower as the auctioneer is scanning screens and the chat to see who’s bidding. So the bidding tends to proceed at a slower pace, when compared with dramatic bidding at the conclusion of a street auction. The agent may choose to record the online auction too, so be prepared to consent to being recorded.
Online auctions allow you to keep your cards to your chest
Knowing how to bid at an online auction means using the technology to your advantage. As with any auction, agents will have a team watching you to see your bidding strategy. In particular, they’ll pay attention to any emotions you show. They make a note of when you drop out so they can find out your budget (and sell you something else later). That’s why it’s a good idea to be careful what you say, even when you are on mute.
So agents and bidders can’t see you, it’s a good idea to turn away to have discussions with your partner about the progress of the auction. You can even cover your mouth when you speak so agents can’t lip read (some are very savvy). We’ve seen agents cover their face during the auction to converse with their colleagues, so feel free to do the same yourself.
Or, if you prefer you can have a notepad by your side and share notes as the auction progresses. The advantage of the notepad method is the agent and other bidders won’t even know you’re having a conversation. Whereas if you turn away they’ll know you’re having a chat, even if they don’t know what you’re saying.
Don’t worry about the crowd
You might be alarmed to see that 30 people are attending the auction and be intimidated by the potential for many bidders competing. However, many of the attendees will not be placing a bid. Some will be buyers using an advocate to bid, and others will be admin staff from the real estate agent. Others will be family, friends and neighbours of the vendor. A few more will likely be buyers simply there to research the process or get an idea of the market. So with an online auction of 30 people, perhaps only 2-7 present will be actual bidders.
Have your finance ready, and stick to your limit
As with any property auction, you need to have your finance prepared, with preapproval so you know your maximum bidding limits. Having a clearly prepared bidding strategy will ensure you don’t get caught up and end up buying an overpriced property.
Starting the bidding
Many clients wonder if they should start with a strong bid. It can be a good strategy to establish yourself as the top bidder. However others like to let a few bids pass before joining in the process. It’s really up to you, and the circumstances of the auction, such as the number of bidders competing.
Video or not, you want to have a calm, collected demeanour that shows other bidders you are ready to buy. Looking stressed or panicky might give your game away. Even if you are near your limit, keep bidding calmly and confidently. Remember, there is always another house around the corner, so if the bidding goes beyond your budget you are wise to drop out. (Read our advice on what to do when you are the underbidder at an auction).
Consider a ‘buy it for me’ service
If you are really unsure about how to bid at an online auction and you desperately want the keys to a property, consider bringing in expert help. Most buyers’ advocates (us included) offer a bidding service. We will prepare your strategy, inspect the property, arrange a building inspection, research the market, liaise with agents, recommend your maximum price and bid on your behalf at the online auction. This means you’re free to leave the machinations of the auction to us, and relax while we bid on your behalf.
Hopefully you get the keys!
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