Facebook Question And Auction Nerves

SPEAKER_01 0:10

This is the series I call a question from Facebook. Good old Facebook. I love those. I've got George in the house with me. Hello, George.

SPEAKER_00 0:17

Hey, Zebrine.

SPEAKER_01 0:18

So this one is a post from a Kiwi First and Buyers Group.

SPEAKER_00 0:22

Yep.

SPEAKER_01 0:23

We see that one a lot and I get tagged a lot on it, which is great. Thank you for those that tag me. But every now and then I come across something and I go, cool, we should actually bring it up onto the podcast. So I'm gonna read it out to you. Yep. And let's bounce some ideas. Hey team, my partner and I are going to an auction for a house on Thursday. We had tried to do a pre-auction purchase, but the vendor said nah. And let's go to auction. We are feeling a bit anxious about it all. Any advice for the auction room? We have lots of people who are going to support us, but it's still very scary because we really want this house. Thanks.

Pre-Auction Offers And Resubmitting

SPEAKER_01 1:00

Yeah.

SPEAKER_00 1:01

Yeah, auction can be a scary thing, especially if you've never done an auction before. The the thing there about the pre-auction offer as well is to know that yes, you can't negotiate with a pre-auction offer, but you can resubmit your offer as many times as you want. So even though the owners have said no, we're gonna go to auction, if you wanted to, you could resubmit another offer at a higher level if you wanted to. I had someone once that resubmitted three times until the owner decided to accept it. Oh. But we still did the auction and we brought it forward. Now that is down to the owner if they decide to do that. I've had it before where someone's made a pre-auction offer, but they've said with their pre-auction offer, this offer is only available if you take it out the auction campaign and take our offer. So to do that, it needs to be a pretty attractive offer. At that time, it was a very attractive offer, and the owners didn't want to risk losing it and losing these buyers, so they took it. But if they decide not to take it, as I said, you can then up your offer and resubmit it. If

Budget Limits And Bidding Psychology

SPEAKER_00 2:15

they decide not to and they want to go ahead with the auction campaign, one thing that we do do at Harcourts, we offer auction training for people. Yeah. So we do that every Tuesday evening online live with one of our auctioneers.

SPEAKER_01 2:31

Oh, wow.

SPEAKER_00 2:32

And we find it very, very useful. Nearly every single buyer that I have sent on that training, most times they've ended up being the winning bidders.

SPEAKER_01 2:42

Okay, so there is a strategy for how to bid. You can't just, it's not trade-me reserve auction where you're like ding ding ding ding ding ding ding ding ding. No.

SPEAKER_00 2:50

I mean, obviously, the most important thing is is knowing your budget.

SPEAKER_01 2:55

Yeah. You know, that's where I come in.

SPEAKER_00 2:57

That's right. That's where you come in. So it's knowing your budget and knowing where that level is, and you've got to be okay, if it goes to that, then that's it. You've got you've got to be comfortable. You know, if you're going above that, you're taking big risks.

SPEAKER_01 3:11

Yeah.

SPEAKER_00 3:11

And you and I mean a lot of times you can't. I mean, sometimes as well, you might actually qualify someone for a budget, but they might not be comfortable with that. They might want to buy a house under that. So that's up to them. They've got to go in there with a price in their head and say this is the top price that we would offer.

SPEAKER_01 3:29

Yeah.

SPEAKER_00 3:30

So there's two theories to that when you go into an auction room. You can either try and blow out the competition with a high offer straight away, or you play it down and start low and working your way up. What one of the good ways we've seen that works very well with auctions, if you go in with a bid, and let's say you are bidding against someone, what I see work very well is when you put your bid in and then you're waiting to see if someone else bids, if they're pausing a bit, don't wait. You go in with the next bid, that throws buyers off interest.

SPEAKER_01 4:09

There's a lot of psychology involved, isn't it? Absolutely. Because the way I see it, it get it can get quite emotional and it can get quite gamey. Yeah. Because you're like, oh, I don't want to lose now.

SPEAKER_00 4:18

Absolutely.

SPEAKER_01 4:19

And you then you just get a little bit too carried away. And this is where that support system really comes in.

SPEAKER_00 4:25

Absolutely.

SPEAKER_01 4:26

That can pull you back and be like, hey, hold on a second.

SPEAKER_00 4:28

So what what another thing that we do, Megan and I at our auctions, we we always try and sit with our buyers. Now, obviously, there's only two of us.

SPEAKER_01 4:36

And if you have like four buyers or three.

SPEAKER_00 4:38

Yeah, you do. So we involve other agents in the office. So we we select who we would like to work with our other buyers and sit with them. Now that sitting can be the the the agent can either do the bidding for them. So then we would sit down before, we would talk about a strategy, we would talk about their highest offer. If they wanted to share that information, if they weren't comfortable in sharing what their highest offer is, then what we do is we just discuss with them before each offer, are you comfortable with this much? Normally I've got a little notepad there and I'm writing down amounts. Would you like me to offer this? And they can tell me whether I do or don't. The other option is they bid themselves and I just sit there with them and just keep them right. So keeping them in track with the bidding, you know, because sometimes you can get a bit sort of lost with the moment and forget where the bidding's at. So we always sort of write down the number of where the last bid was right in front of us so they they can see that. Harcoats, we do have it up in a screen, but sometimes you're so in the moment with whoever you're with, you don't notice that. So I'm always keeping them on track. Here, this is where the last bid is. The auctioneer might be asking for a bid of this X amount, they might not want to put it. So I'll say, you don't need to put that. I'm like, put this much, but less, less, you know, and just don't do it doing it that way. So there's lots of different strategies. So that would be my advice.

Support Team And Upfront Costs

SPEAKER_00 6:07

It's it's getting a good support team around you, which is finance as well, getting a good good broker on on your side, um, and getting a good agent to work with as well. And I think that's key as well to help take that stress away. They should be explaining the whole process to you so that you're not going in there blind with it.

SPEAKER_01 6:29

I find with auctions often we don't really like our first-time buyers to go into that if they don't have 20% deposit. Yeah. Because when you don't have 20% deposit, the bank will require you to do valuation ahead of time, right? So you could potentially go get valuation done, spend $1,000 on something that you may not win. Yeah. So usually with my first-time buyers, we try not to go to auction. But if anyone else that got 20% or doesn't mind keep spending money on valuations, they can do that. But there's also builders' report that sometimes the bank will require. So it's a lot of cost up front for the auctions.

SPEAKER_00 7:03

I mean, would the bank do the banks accept builders' reports that have been supplied by the vendors?

SPEAKER_01 7:08

It's interesting you ask that. Normally they will say, Okay, well, thanks for that, but we still want you to go and get your own builder's report because if you want to pull out for any reason, yeah, and if you haven't done your own builder's report, you can't really fall back on the vendors.

SPEAKER_00 7:21

So that that's really tough then when the the banks are asking that. Never used to always be like that. Is it's quite a quite a new thing where they want to start with the process. It depends on the property. It depends on the property.

SPEAKER_01 7:30

So if the property, you know, ha triggers any red flags for the bank, yeah, they may insist. Normally they don't need builder's report. Yeah. They don't, but every now and then we see them going, hey, actually we need XYZ.

Conditional Offers Before Auction

SPEAKER_00 7:42

Yeah, so I mean the the the other way there is as well, where I've had people in that situation that aren't in a position to bid. And what we've done is we've put a conditional offer together, yeah, and we get the auctioneer to have that there on the podium. So the owners get to see the offer then before the auction starts, just before it and let them see it. So if they're looking at that offer and thinking, yeah, that's quite attractive, yeah. There's a couple of conditions in there, but it's not too bad. Then when they go through the auction process, if it's not at a level where they see is quite as good as the conditional offer, then they can decide not to sell at the auction and then go and work with the conditional buyer.

SPEAKER_01 8:28

What sort of signal does the vendor give to the auctioneer going, no, I don't want to buy this? Like, how do they do that?

SPEAKER_00 8:34

Well,

Reserve Price And Vendor Control

SPEAKER_00 8:34

what what we do is there's always a reserve set beforehand between the auctioneer and the the homeowner. Okay. So there's a reserve price, and and and usually the the homeowner will have that quite inflated. So so that way we're not going to be selling off at a silly price. So before it can actually be sold, it's got to reach that reserve. Now, a lot of times if they know the homeowner is on the fence with maybe a conditional offer sitting there and it reaches reserve, our auctioneers will say, Hold the auction for a moment. They'll go and talk to the homeowners and say, Hey, look, we've reached this reserve. Do you want me to put it on the market now? Or would you rather work with this other offer behind? So there's no the house is getting sold away from under them without that. The homeowner is always in control.

SPEAKER_01 9:27

Okay. Next

Bidding On Multiple Properties

SPEAKER_01 9:28

question is what if a person comes to the auction and wants to buy either of the properties? So there's two auctions for two houses and they don't know which one. Do they have to identify ahead of time? Because I think there is some paperwork they need to pre-fill, right?

SPEAKER_00 9:43

Well, that there is. For us, it's only an acknowledgement that they can pay the deposit on that on that day that there and then, and that they have had pre-approval or everything with it.

SPEAKER_01 9:55

So can they bid on two houses if they miss out on one?

SPEAKER_00 10:00

Absolutely. Okay, absolutely. But again, that would be something that they would have to discuss with you first, and if they could go for that. Yeah. Yeah. Look, we've had it before where people have bidded uh for a house and got it, and then it's fallen over, you know, at the end because they didn't have the right finance. Yeah, they just didn't have you.

unknown 10:22

Exactly.

Wrap And Key Reminder

SPEAKER_01 10:24

Oh George, thank you so much. I think that really clarifies a lot of information about the auctions and how they work and all the beauty behind it. But as you say, you know, clients are super lucky to have someone like you in their corner. They should be really reaching out. And for those that are listening from abroad or outside of Capita region, you know, find your agent, work with them. They will help you to get to the auction.

SPEAKER_00 10:45

It's like anything in life, it's only scary when you don't have the right information.

SPEAKER_01 10:49

Yeah. Yeah, exactly. Awesome. Thank you, George. See you soon again.

SPEAKER_00 10:52

See you soon.