HOW TO NAVIGATE AN AUCTION
WITH NATHAN BIRCH, PROPERTY INVESTOR
Before the age of 31, Nathan Birch had acquired a portfolio of more than 200 properties worth over $50 million. He’s got a knack for succeeding at
auctions and getting a good deal, despite the fact that auctions are designed to make bidders fork out more. Here are his tricks for how to outsmart an auctioneer.
DO YOUR RESEARCH There are generally six weeks leading up to an auction, which is enough time to research the market and comparable sales to understand what the property is really worth. Speak to the agent and get an idea of what they think it might sell for, but don’t let slip how much you’re willing to offer – you don’t want them to start raising the price expectation with other potential buyers. Also take this time to arrange a pest and building report so you know what you’re bidding on.
UNDERSTAND YOUR BUDGET Set yourself a soft price limit and a hard price limit. The urge to buy a property may be overwhelming, but you need to balance this against your financial potential. A property accountant and financial planner can help you think about your finances strategically and determine whether this is the best move for you.
CONSULT THE EXPERTS Whether you’re buying to invest or to live, you should consult with a property solicitor and a mortgage broker. Your solicitor will review contracts and help you understand the weight of your actions on auction day. A mortgage broker will pre-approve finance so you can bid confidently. If it seems like too much to handle, an expert buyer’s agent can streamline the process.
DON’T INVITE EMOTION Standing inside the property, it’s easy to feel at home and get attached. The thrill of making it yours is tantalising. This is exactly what the sellers want you to feel. Instead, you need to overcome the fantasy and keep a cool, rational mind. Acknowledge the bidding game for what it is: a game. PLAY TO WIN Anything that slows down the auction or distracts other bidders will give you an edge. I like to bid with smaller, non-rounded numbers, ask the auctioneer questions about the condition of the property and then close with a big bid. The more you can distract people from the auction and allow them to think, the less emotional they become and the less likely they are to bid big. It may chip your ego to disrupt the room, but the alternative is that someone else will likely snatch up your next investment.