Thinking of bidding at an Auction? Here you will find the answers to frequently asked questions, tips on how to bid and traps to avoid at all costs
Auctions can be daunting but they can also be a breath of fresh air in a market (like Wellington) that has been dominated by Tenders for as long as I can remember. Going through a Tender, or any blind-offering, competitive deadline situation can involve a massive amount of guess-work as you try to pitch your offer just right knowing you only have one chance.
The game of picking your price is extremely stressful, trying to make sure you are not so high that you pay too much, and not so low that you miss out on your dream home.
1. Know Something About Cars or Bring Someone Who Does
Don’t ask me about the difference between a catalytic converter and a carburetor. I’m not going to know my transmission is going bad by how my car’s running.
Despite my total ignorance of all things automotive, I was lucky my live-in boyfriend knew a thing or two about cars. I also had family members I could call on should a problem arise.
Some car auctions offer limited-time guarantees on certain aspects of the car’s condition.
For example, buyers who purchase a “green-light” vehicle from Interstate Auto Auction have two days to confirm the motor and transmission do not need to be replaced. The company advises driving the car 50 to 100 miles and having it checked by a trusted mechanic.
2. Keep the Vehicle’s Potentially Short-Term Future in Perspective
I bought my car with the mindset that it might not last very long. Considering I probably would have spent $400 in transportation costs over the next few months without it, I thought if the car made it three months, I would have gotten my money’s worth.
With these types of deals, it’s safe to assume the car may not outlast a brand-new model leased from a certified dealer. But it was also comforting to know I wasn’t shelling out a $400 payment every month in a lease I was bound to for years.
3. Get your finance approved
Most banks will give you a ‘pre-approval’ for finance, which is subject to their ‘final approval’ of the sale and purchase agreement and the particular property you are purchasing, so most buyers rightly believe this means they need a finance condition when they offer. Buyers who bid at an Auction approach their mortgage broker or bank well before the bidding starts and ask for unconditional pre-approval for the particular property they are interested in.
Often banks will provide ‘one-off’ unconditional approval in this situation (up to a certain amount) so you can bid confidently knowing your finance has already been approved.
4. Decide on your strategy
Are you going to place an opening bid to un-nerve the competition? Or are you going to wait till the very last minute “Going once! Going twice!….” before you jump in? There is no right or wrong approach here. I do suggest you bid confidently right up until your max though. Stalling for time shows weakness and will only encourage other buyers to keep going, hoping you are just about to pull out.
5. Always Bid an Odd Number
This is probably going to be my No. 1 rule the next time I’m part of any blind auction.
When I found out my initial bid matched someone else’s, I could have kicked myself for not bidding $301 instead of $300. I could have saved $99 — or $99.99 if they’d allow me to bid $300.01.
Of course, bidding odd would not have the same effect at a live auction, where someone could instantly outbid you.