House auctions and psychology of bidding

[RogerS]

We're off tomorrow to bid for a small cottage that needs renovation. I've only ever been to one auction before and know of Rule No.1 - set and stick to your maximum price.

But can any one else give any advice as to bidding strategy? Do you keep out of the bidding and then come in at the end?

One thing that I'm not sure how to approach is what the strategy should be in the following scenario.

Say we want to bid a maximum of £100k. In an ideal world we would be the people who bid this amount and ideally win the lot. However, what does one do if someone else bids the £100k? OK - we could bid another £5k but if the lots were going up in, say, increments of £10k then maybe that would give a message to the other bidders that we're reaching our limit...which I guess we are and so have probably answered my own question ...but I'd still welcome any recommendations and advice.

 

[Adam]

but I'd still welcome any recommendations and advice.

Don't flinch at the wrong moment!! Ho ho ho, only joking. Good luck.

Says here http://www.channel4.com/4homes/buyingan ... ion-2.html

"It’s easy to get caught up in a bidding war. Remember your maximum limit and stick to it. Bear in mind you’ll have solicitors’ and surveyors’ fees, possibly stamp duty and the cost of any repair work which may be needed, as well as the auctioneer’s fee. Bear in mind, too, that on signing the contract you’ll be responsible for insuring the property"

Have you tried googling for buying a house by auction?

Adam

 

[Paul.J]

Roger theres been a programme on t.v now for a while about buying proprties at auctions.Think they are repeated on Sky.
Their main advice is what you have said "Don't go over you budget" and don't bid too early.Wait and see who else is interested in it.
All depends how popular the property is,and don't forget the VAT at the end.
Paul.J.

p.s Roger it's called Homes under the hammer and is on Sky 256 tonight at 6pm.
Good luck.

 

[RogerS]

don't forget the VAT at the end.
Paul.J.

Huh? VAT? On what, the whole purchase price? 17.5%? I hope you mean stamp duty.....

 

[Paul.J]

Roger.
My mistake i was thinking of the Auctioneers fees
Paul.J.

 

[DomValente]

Most people will have a figure like "100K" in their mind always be prepared to go one bid over that.

Dom

 

[TonyW]

Not much to add to the other comments here other than to support the view that you should set the maximum you are prepared to pay for the property including auctioneers fees and stamp duty etc. Once you have set your maximum (which may be what you consider to be a fair price) stick to it.

My own preference would be to keep out of the bidding and wait to see who is interested. Of course the other bidders may take the same stance.

Just like to wish you good luck with your bid. Hope you will let us know how it went on the day

Cheers
Tony

 

[JFC]

Let yer missus bid , that way you can't get the blame .

 

[Project88]

One incident I remember from a TV prog related to looking too enthusiastic/keen to buy.

In the program the auctioneer saw the enthusiasm of the bidder and then took competing bids from a fictitious bidder, referred to as taking bids 'off the wall'. I am sure I fell foul of this when bidding on some old gouges some time back, although it only cost me a few 10's of £'s.

My advice is to bid slowly and with consideration, give the impression that you are already very near your limit even if you are not

Best of luck

Cheers,
John.

 

[Russell]

make sure you get a chance to view first before the auction a lot of those properties on the sky program have extra work needed the bidders weren't aware of.

 

[wizer]

Roger it's a bit different to eBay in that if you want to bid you'll have to wait for the bidding to stop. i.e When the auctioneer starts, someone will bid and another will bid above that. The bidding will now be between just those two people until one concedes, then its open for someone else to put their hand up. My advice would be to just wait, be very cool and watch the bidding. Come in at the end if it does not go above your budget. Stay calm without giving anything away. One trick is to be so subtle that your bidding opponent does not see you in the auction room. The thought of a mystery bidder may well scare him off. The auctioneer will often wind the bidders up with a bit of banter, don't succumb to it, they are just trying to push up their commission.

 

[Gary S]

Hi Roger,

I went to a property auction trying to buy a flat a year or two ago (plan was to do it up and sell it on - maybe meeting Sarah Beeney along the way. [-o<

I went to see the flat, did all my sums and went along with a maximum figure of £130k. That's how much I was prepared to pay to THEN pay costs on top as well as renovation costs / time and then sell for some profit.

Make sure you've done those sums - that way it's easier to NOT get carried away and pay over the top in the heat of the moment. You'll convince yourself out of it because you'll know you'll be paying too much for it - making it not worthwhile. Your MAXIMUM figure should represent the MAXIMUM you can pay to make it worth your while doing.

Back to my story...the bidding started at about £80k...I sat tight...went over £100k and I was getting ready to bid...ended up at £137k so I missed out and didn't even place a bid!! A nice day out though... :lol:

Good luck - let us know how you get on (and if Sarah Beeney comes round PLEASE LET ME KNOW!!!)

Cheers

Gary

 

[RogerS]

Thanks, guys, for all the excellent advice.

The place was packed. There were nine lots. Ours was Lot 6 and the last three were little pockets of land that Welsh Water were selling off. The early lots produced some amazing results.

Lot 1 fetched 70% over the guide price....gulp...not looking good. Quite a few people left.

Lot 2 did pretty well also. A derelict barn completely off the beaten track in Monmouthshire with planning permission to erect a Grand Designs style building. Much, much money. After that one, more people went.

Then Lot 3 didn't make the reserve and was pulled.

Lot 4...another huge uplift on the guide price...nearly 50%. If ours goes for this sort of uplift then we might as well pack our bags now. Still a load of people left. One more to go but too many people left for my liking. Don't they know I need this for my pension (hollow laugh).

Lot 5....bidding went a tad over the guide price but failed to meet the reserve and so was pulled. And so finally Lot 6...still too many people left. Surely they can't all be interested in the cottage?

...my heart hasn't hammered away as much in years. Bidding started low...I kept my powder dry as recommended by you guys..bidding met the guide price and kept on going. Gulp. Well..we kind of expected that and had set our upper limit. Then I entered the fray....until it was left between me and another guy...I made another bid (fortunately well below our maximum) and by this time my heart was fit to bursting as I was expecting someone else to start bidding against the two of us...until...going once, come on ladies and gentlemen, it's worth more than this. I held my breath. My heart was pounding. Going twice. Gone to the man at the back. Who me?

 

[Steve Maskery]

=D> =D> =D> =D> =D> =D> =D> =D>

 

[Russell]

Excellent I hope its a fruitful investment

 

[wizer]

wow well done Roger! You'll be hooked now.

 

[DomValente]

Congratulations Roger, hope you enjoy it.

Dom

 

[JFC]

Nice one Roger ! With that spindle moulder i take it you will be making all the windows , doors , architrave , skirting boards etc .

 

[TonyW]

Great news Roger congratulations.

Cheers
Tony

 

[dedee]

I remember that feeling bidding £10 on a cast iron surface plate :lol:
Well done

Andy