A property Auction is designed to have prospective buyers compete for a property to achieve a maximum selling price. This is great if you are the seller, but can put you at a distinct disadvantage if you are the buyer.

Buying at an Auction requires knowing the auction rules, as well as the rights and obligations of a bidder. Setting a firm budget is also critical.

In recent years most State governments had released new guidelines for property auctions. While the guidelines vary slightly from State to State, they were designed to eliminate dishonest practices such as dummy bidding and excessive underquoting

Here are some practical strategies to follow in buying at an auction:

• (i) Attend several local property auctions to get a feeling for the process and gain some confidence before taking part in an auction yourself.
   
• (ii) Organise your finance so that you are know how much you are able to bid to and have the deposit ready to go. If you are the successful bidder at an auction, you are required to pay 10% deposit on the day. This money must be readily available as the seller will not wait for their deposit.
   
• (iii) Know the local property prices and set a limit on your purchase price. It is very easy to get carried away with the excitement of the Auction. Remember that winning at an auction is easy if you are prepared to out-bid all competition. Buying well is much harder.
   
• (iv) Be aware of the tricks used by agents such as underquoting. If your budget is $300,000, chances are that you will not be able to buy a property which is going to auction with an estimated price of $290,000 plus. Generally the selling price is between 10% to 20% higher than the quoted price.
   
• (v) The practice of dummy bidding involves the agent in collecting dummy ‘bids’ from the trees and the birds to bring up the price to a level at which the vendor is prepared to sell. Make absolutely sure that you are bidding against ‘real people”.
   
• (vi) Have the property title, purchase contract and the building itself checked out by professionals to ensure that you are aware of any potential title issues, building conditions or structural problems.
   
• (vii) You may be able to purchase “before auction” – the selling agent will advise. Sometimes this is the best method of buying and will avoid all the uncertainty associated with an auction. Not all agents or vendors will be prepared to accept pre-auction offers, but it is worth inquiring.
   
• (viii) If you have made a pre-auction offer which was not accepted, make sure that you do not attend the auction yourself. If you are still interested in the subject property – have a friend or a buyer’s advocate attend and bid for you. The reason for this is quite simple. The agent will know that you are prepared to go at least to the price you have offered before auction and will bid the property up to this level.

Above all – remember that an auction is a theatrical performance.

The better you act, the more you win.

Good Luck!!!