Most auctioneers these days don’t use the words “on the market” during an auction, so you often hear buyers calling out, asking “is the property on the market yet?” Auctioneers don’t like buyers expecting them to announce when the price has climbed higher than the reserve because they want you bidding BEFORE it hits the reserve price, not only afterwards. Makes sense, doesn’t it? I mean, how the hell will it ever reach the reserve if buyers don’t bid?
Now, there are some clues as to whether the bidding has reached reserve or not. And also whether that reserve is high or low.
Say the agent is quoting a guide price of “around $750K” but you suspect that they want a lot more money for the property. You could try an opening bid of $650K. If the reserve is close to $750K the auctioneer will probably accept your bid. If they have a high reserve however, they will probably reject your opening bid, saying that it isn’t high enough.
Another clue of a high reserve is when a frustrated auctioneer uses a vendor bid to open the bidding – one that is higher than any buyer is prepared to pay and results in no bids. Not a great outcome for anybody really. As a buyer, you get no clues as to what price any other buyers may have been prepared to pay.
Once the auction gets underway, if the auctioneer is refusing to accept small bids you can bet your bottom dollar that the reserve is miles away. It’s a good trick to try small bids if you suspect the vendor has set a high reserve. If the auctioneer refuses your bid, you can say “that’s ok” and wait to see if someone else is prepared to make a higher bid. If they are, wait until bidding slows down again. If they don’t, tell the auctioneer you are still prepared to make your original bid. They may then decide to take it…
Despite the fact that you will rarely hear the words ‘on the market’, nearly every auctioneer will make it very clear when it really is about to be sold. He/she will say something like “make no mistake, we are selling”. Or perhaps you have seen the selling agent go inside the property and confer with the owners. Then they come out and whisper to the auctioneer, following which, he/she might say “my vendor’s instructions are clear, the property is about to be sold”.
Bottom line is that if you don’t bid you won’t buy. And every auction is different, so I won’t be recommending here that you wait until the reserve has been reached, nor will I suggest that you should start the bidding. Its horses for courses and you need to know the value of the property, what your own limit is, how many other people are likely to bid AS WELL AS having a sense of how realistic the vendor’s price expectations are.
Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.