Renowned auctioneer Damien Cooley says buyers need to stay calm, confident and in control to successfully bid at an auction.
As a buyer, it can be quite easy to master an auction – once you know what to look out for.
Respected Australian auctioneer Damien Cooley told KnowHow founder Bushy Martin on the Get Invested podcast that the greatest successes at auction come from maintaining a poker face, observing those around you and changing your bidding style based on the competition present.
The benefits of buying at auction
Auctions are the most transparent way to buy real estate and will often result in a fairer price compared to off-market purchases, which may see properties selling for a higher price than their value.
“So a lot of vendors think their homes are worth more than what they really are,” Damien said.
“And I’ll tell you this – a lot of properties that are sold off market, it’s vendors that want an extravagant number and want too much for their homes. So particularly right now, that’s very evident. Anyone who’s selling off market at the moment, they’re too scared to go to market because they think they’re not going to get their price, and that’s because their price is probably 20% more than what the property’s actually worth. So an auction delivers, I believe, the fairest way for someone to buy.
“Plus the buyer is also in control, because if they don’t want to pay the money, they don’t have to keep it.”
The body language to look out for
The biggest mistake a buyer can make, whether as an individual or couple, is not watching their competition, and giving away too much through their emotions and body language.
“You can learn a lot from body language. So if you go to an auction, and you’ve got a budget for the amount of money that you’re prepared to buy the property for, then watch the people that you’re bidding against because they have their telltale signs of when they’re reaching or at their limit,” Damien said.
Damien said of the main giveaways to watch out for are facial expressions.
“I look for those little signs. I watch the reactions on their face. So sometimes when I ask for an opening bid and I’ve only got one bidder, I’ll say a high number. I know the buyer’s not going to bid, but I’m actually looking for the reaction to the number that I say, because it’s very difficult to not have an immediate reaction to something that an auctioneer says – whether I say a low, middle or high number,” he said.
“So hypothetically, I go to the auction and I say, we’re looking for an opening bid of $1.3M. And I know that’s high, but I’m actually watching the buyer’s face when I say that and their immediate reaction. So I look at the way they move their eyebrows, the way they move their mouth, and the way they look – is it a surprised look or is it a very nonchalant look? Is it a not-surprised-at-all look? Because in their mind, they might be coming with a budget of $1.4M, and so $1.3M sounds fine.”
The key to becoming the highest bidder
Success at an auction is largely dependent on the amount of people that have registered.
“There are different ways to play it. So I think one little tip is to try and get to an auction early and watch who’s registering. In NSW and most Australian states you’ve got to register, so watch to see who’s there. Ask the agent how many bidders have registered. They don’t have to tell you, but you can catch them off guard sometimes by asking that question,” Damien said.
If there are several bidders, Damien said confidence is crucial.
“Every auction is different. If I can see that there are a lot of people registered that I’m bidding against, then I’m going to be aggressive. I’m going to come out swinging, I’m going to bid confidently, and I’m going to have a crack at it right to the end,” he said.
On the flip side, if there aren’t many bidders, Damien recommended that buyers play it cool.
“If I know that there’s only one other bidder or if I’m the only bidder, I’m going to play hard. I’m not going to open strongly. I might even open with a low bid and I might let the auctioneer say no. I’m going to play it a lot tougher because I’m there to negotiate the best deal for me as a buyer,” he said.
And if you’ve noticed that other buyers have seemingly reached their limit, this is the time to go full throttle.
“If you’ve got some budget left and the other buyer is at their limit, that’s the time for you to actually ante up. That’s the time for you to be faster. And you actually don’t need to be bidding big increments at that point. A small increment is actually sometimes better because it’s not the increment, but the speed at which you place the bid that actually hurts the other buyer mentally,” Damien explained.
As an added measure, Damien also recommended covering your face where possible to shield your facial expressions.
“If you’re a buyer going to auction now, I say wear sunglasses and wear a mask. As an auctioneer, I absolutely hate that because I can’t see their face or their eyes, and so it’s a lot harder to read them. So if you want a tip, that’s probably my number one.”
Why you should employ a buyer’s agent
Hiring a professional is especially useful if you are unsure or uncomfortable with bidding for yourself at an auction.
“So there are strategies you can put in place to bid and to successfully buy. I think the really important rule here is if don’t feel comfortable bidding for yourself, you really need to employ a professional to do it for you. Because I know myself, as an auctioneer, it’s harder for me to negotiate against a professional negotiator than it is to negotiate with someone who is emotionally invested in wanting to buy that property,” Damien said.