Afraid of stuffing up at that all-important auction? Here are tips to beat the opposition?
Afraid of stuffing up at that all-important auction? Here are tips to beat the opposition?
It's auction day and you're a nervous wreck. You've found your dream home, got pre-approval for finance and the property has been given a clean bill of health thanks to a builder's report, LIM check and title search by your $400-an-hour lawyer.
You've lost out before and you're trying not to get emotionally attached, but this house ticks all the boxes. Now for the hard part - a tense and very public bidding war.
SCROLL DOWN FOR THE EXPERT'S TOP AUCTION TIPS
Auctions are a daunting prospect, even for seasoned professionals, and most potential purchasers believe the process comes down to who has the deepest pockets. But preparation, confidence and body language can be as important as a hefty bank balance, according to an industry pro.
Ray White Mission Bay owner Wayne Maguire has called thousands of auctions during his career and freely admits his job is to milk every last dollar from buyers.
"I won't let them off the hook when I'm taking bids. I won't take no for an answer. I'm going to be so charming and try to get another thousand bucks. That's my job."
But he had also seen countless people miss out because they lacked strategy and nerve in the face of dramatic annual house price inflation, now running at 20 per cent.
"I think Kiwis are very polite. It might be the house you love and want for your family but I think we tend to give up a little too easy. Whereas we could play a bit harder and win more often."
Last week Mr Maguire staged a How to Bid and Buy at Auctions seminar for more than 130 house hunters, providing tips on the auction process designed to make bidders more competitive and help blow rivals out of the water.
Auckland property sales are dominated by auctions, with nearly half the region's May transactions done under the hammer.
Mr Maguire said competition for scarce property listings was cut-throat and serious buyers needed to turn up mentally focused and ready to perform.
Know your limit
Most thought budget was the main factor when bidding for a property. "Certainly your budget plays a component in it. But it's your strategy of how you present and how do you use the money that's available to you. It's about how to be more competitive."
Everyone was nervous - including vendors, agents and even the auctioneer, he said.
Preparation was key and having a game plan would give buyers the best chance of success. Mr Maguire said it was important to have a financial plan and know your limit.
Buyers should jot down a running list of price thresholds - starting from the likely opening bid (usually around CV) and ending with the final price limit they are prepared to pay. "You've got to stop when you hit your limit."
Putting in an early bid helped calm the nerves. It also showed rival buyers you were in control and serious about purchasing the property.
In terms of tactics, he recommended firing back quick bids while opponents were contemplating their next move - keeping the pressure and glare of the room off you and putting more heat on your rivals. And stand where you could be seen, ideally halfway down the room on the wall. This gave the bidder a clear view of both the auctioneer and opponents, he said.
"You can turn and look and make a judgment call. 'Are they confident? Am I going to beat them?'"
Body language was among the most critical aspects of the auction process, Mr Maguire said.
Bidders should "stand proud" and call out bids in a strong voice.
"Body language counts I think more than even your budget. Look like you're going to own it and make it look like you're going to bid all day long. I'm telling everyone here, 'I'm here to buy'."
He encouraged buyers to make "strong bids" in higher increments than their opponents, rather than holding off for a late play that may never eventuate. "I just see people miss out."
However University of Auckland sociology lecturer Ronald Kramer said that the auction tips were effectively "palming off" responsibility for Auckland's housing crisis on to individuals.
"The perversity of it is a bit inescapable to me. Never mind the fact it's completely unaffordable and the whole logic of the auction brings people into competition to jack up prices."
Most first-home buyers would still be shut out by soaring house price inflation on the back of supply and demand problems and rampant speculation, Dr Kramer said.
He added that auctions unfairly dropped people into a social interaction "that's very intense, very difficult to negotiate and manage".
"Auctions and the way they're set up provide a strong inducement for people to engage in reckless spending. It's more important to beat the other person rather than to think about what you actually have at your disposal in terms of budget."
Getting the right home hard even for good earners
Jon and Carissa Gulbransen have already attended more than 100 open homes in a fruitless search for their first house.
They are about to start a family but have given up on good school zones after being repeatedly priced out of Auckland's market.
Jon and Carissa Gulbransen find auctions intimidating but say they have to suck it up. Photo / Chris Loufte
"We're not delusional and wanting to live in a Ponsonby villa or anything. But we want to feel safe.
"We're realistic, we're not looking for a mansion. But it's completely unaffordable. We're unable to afford to buy in New Zealand."
The couple are both working professionals with decent incomes. They returned from Britain two years ago with a sizeable deposit saved during their five years abroad and had hoped to pick up an entry-level property in the mid-$700,000s.
Mr Gulbransen, 32, works for an IT consultancy and his wife, 31, works in business engagement. Even with their combined financial clout, they are struggling to get a foot on the property ladder, given stiff competition from other first-home hunters, Kiwi investors and overseas buyers.
They have considered properties out west, on the North Shore and in Glen Innes. But after attending a handful of auctions to get a feel for the process, they are yet to place a bid. Mr Gulbransen said the Auckland prices were "intimidating".
"You turn up at an auction and you've got no idea. You go to the estate agent: 'Can you give me an [indication] of where this is going to go? Is it going to be 8s, 9s or a million?' And it's very rarely you'll even get that. I think with some honesty they don't know."
Mr Gulbransen admitted the couple would probably have to "suck it up" and pay well in excess of their budget in order to secure a property.
"It's probably been in the last month or two I've said, 'Hey, actually, this isn't going to change'. We just have to bite the bullet on this. But it is slightly intimidating if you're going to take on a massive mortgage on your first house, you're about to have a baby and are going down to one income. This is just life in Auckland."
8 Wayne Maguire's top tips
1 Get there early, settle in and relax. Eat and drink ahead of the auction to avoid fatigue and stay mentally focused.
2 Have a financial plan. Bring a sale and purchase agreement, fold it in half like you're a pro, and jot down a running list of likely bidding thresholds to follow, ending with your absolute limit.
3 The cheapest bid is the opening bid. Get in early. It will help calm your nerves.
4 Don't hold the bid. While your rivals are considering their next move, fire back quick bids. This uses up your opponents' time and keeps the pressure and glare of the room off you.
5 Stand where you can be seen. Halfway down the room on the wall so you can see both the auctioneer and your rivals. Don't stand at the back of the room. Sitting at the front is even worse.
6 Body language counts. Stand proud, take a deep breath and use a strong voice when bidding. Look like you are going to own it.
7 Hit the competition. If you're still in budget then burn them with some big whacks. Jump in with higher increments and round up to significant figures to put the heat on rivals. No one in the room knows your price limit except you.
8 Never be the phone bidder. You can't see or hear the auction and your senses are deprived. The only thing you can win on is your budget.
Online tonight: Lane Nichols joins bidders at Barfoot & Thompson's Shortland St auction and reports on the drama.
