19 Nov What to do before you bid at an auction – Bryce Holdaway
It is easy to understand why buyers become nervous before bidding at an auction. There is a lot at stake. Bryce Holdaway is a buyer’s agent and has the ideal suggestion for calming those pre-auction nerves.
Kevin: Auctions are growing in popularity all the time. You need to have a strategy. It’s very easy to get it wrong when you go to auction for the first time, both as a buyer and a seller. Let’s have a look at some of the pre-auction dos and don’ts, this time for buyers.
Joining me is Bryce Holdaway, a buyer’s agent. So, I guess by definition, you should know what a buyer’s agent or a buyer should do at auction. Bryce Holadaway from EmpowerWealth.com.au, and also the cohost of Property Couch.
Good day, mate. Good to have you on the show. Thanks for your time.
Bryce: Thanks, Kevin. Auctions are a scary thing. Even for me as a professional, I’m human, I have a bit of ice running through my veins as the auctioneer gets into full swing.
Kevin: Do you? I would have thought that someone like you who’s been in front of the camera – of course, you’ve done a lot of lifestyle shows and had your own show for many years – and also tuning up to a lot of auctions, nerves would be the last thing you’d have.
Bryce: Yes. I actually use it as a positive. And you know yourself, Kevin, the time that you go to hit record and you have no nerves, sometimes you’re not performing at your best. For me, if I’m going to an auction, I really care about the outcome for my client. There’s no emotion in it for me, but I want to get the lowest price possible and I want to have a really good strategic play at the auction.
Kevin: Bryce, what are some of the dos and don’ts for people? How can they prepare before they go to an auction?
Bryce: My number one is before they even get to the auction they want to buy at, go to other auctions on the weekends prior. Most people would rather be in the casket than deliver the eulogy, so that public speaking environment that you are in in an auction, on public display, the auctioneer has very crafted skills to try and get you to pay as much as you can. That’s a daunting process for someone who’s never done it before.
So, what I’d say is go along to some auctions – ideally for the auctioneer that you’re about to work with, the one you’re looking at – and see how they roll. See how the process works, see what happens when they go inside, see the change in tone, see how they drop it down, because you’re going to learn a heap of intel. It’s like a mock auction before you get to the main event for your own one.
Kevin: Is it a bit like a battle between the bidder and the auctioneer? The auctioneer sits in the middle, doesn’t he? Have you got to understand what he’s doing?
Bryce: Yes, absolutely. You have to know that in any real estate transaction, whether it’s private sale or auction, the nirvana is two people fighting it out. It’s this big public display of competitiveness. But the thing is with an auction, it’s a public display of status, because you don’t want to lose in the money stakes to someone else because you really want to show.
It’s like when you’ve got a beautiful house and people drive up to it, it’s a representation of your status. It’s also the same in an auction environment. You don’t want to lose, particularly when there’s a crowd, particularly once the adrenaline is kicking in, so it’s important that you know what the process looks like.
Kevin: How do you prepare for the structure of the auction? You obviously go in with a figure that you’re prepared to bid to, but is there a figure that you won’t pay? The figure you have in your mind, is it always less than what you would pay? That’s what I want to try to find out.
Bryce: What I try to do is get a 50%, an 80%, and a 90%. A 50% chance of getting it at this price is when there’s not a lot of competition, but in Melbourne and Sydney, there’s been a lot lately. So you want to have really three prices, where there’s an 80% chance to get at this price, and then the highest price is there’s a 90%. There’s always someone who’s going to come along and no matter what, they’ll throw emotion and they’ll beat you through emotion. But in some markets, you need to have that little bit of stretch.
For me, I’m prepping my clients to have three prices and an indication of where we’re going to end up. I rarely see it being at the 50% prices in the markets of Melbourne and Sydney. It’s usually around that 80% or 90% in a lot of cases. In some cases, you just miss it altogether.
Kevin: Yes, because the agent on the floor will try to put a lot of pressure on you to increase your bid, as well. How do you resist that?
Bryce: Just knowing what they’re up to. I guess a lot of auctioneers know that buyer’s agents won’t fall prey to that, but I try to drive the increment of the bids down to the smallest increment as quickly as I can. The auctioneer loves to a $10,000 or a $20,000 bid; I want to get it to $1000 as quickly as I can. But a very good auctioneer won’t allow me to do that early in the piece; they’ll only allow me to do that more towards the pointy end.
In response, I’ll throw out, “I’ll give you $1000.” They’ll say, “No, I’m not accepting $1000 bids, but I’ll take $10,000.” I’ll say no. A lot of people don’t realize that they can just say no. Even if they want to keep bidding and want to keep staying in the game, just sit back and wait. So, really, it’s about letting the agent know, “I’m a professional, you’re a professional; let’s see where we get to in the end.”
But I’m not trying to outsmart the agent. I know what they’re doing and I know what strategy they’re employing. Most of my time and energy and effort is spent on my fellow bidders, because I want to look for signs that they’re getting close to their limit. I want to professionally intimidate them. I want to be in a way that they just say, “Oh, he’s going to buy it no matter what,” and they keep their hand in their pocket. That’s where I spend most of my time and energy focusing on when I’m bidding at an auction.
Kevin: Yes. As a bidder, you have to look confident too, don’t you? That’s part of that bluff, bluffing other people out of bidding as well.
Bryce: Yes. It’s two parts strategy, one part bluff. I’ve bought more properties than I care to list on my last bid where I have nothing left in the bank. The client and I have agreed on a predetermined price, and I’ve just thrown it out there. And if someone gave another $1000, I’m out. But it’s all about what I’ve done in the lead up to that last bid – as I said – to professionally intimidate them and read the body language and so on, so they give in to me.
Kevin: Great stuff. Bryce Holdaway from EmpowerWealth.com.au buyer’s agents. Bryce, thank you for your time. Great talking to you.