Buying a property at auction in Sydney can be one of the most stressful parts of the property-buying process.
Decisions involving hundreds of thousands — or even millions — of dollars can be made in a matter of seconds. The auctioneer is working for the vendor, the selling agent is working for the vendor, and competing buyers may be trying to influence how you bid.
The biggest mistake buyers make is thinking auction strategy begins when the auctioneer calls for an opening bid.
A successful auction strategy should begin well before auction day.
After more than 30 years working in Sydney real estate and attending more than 1,000 auctions, I have seen buyers secure excellent properties through disciplined bidding — and others pay considerably more than they intended because emotion took over.
Here are the key things every Sydney property buyer should consider before bidding at auction.
1. Work Out What the Property Is Actually Worth
Before deciding how you are going to bid, you need to establish what you believe the property is worth.
The selling agent’s price guide should never automatically become your valuation.
A proper assessment should consider:
- Recent comparable sales
- Land size
- Property condition
- Street position
- Aspect and orientation
- Parking
- Floorplan
- Renovation requirements
- Building or strata issues
- Location disadvantages
- Current buyer competition
The most useful comparable sales are not necessarily the properties the selling agent chooses to show you.
You need to look carefully at how genuinely comparable properties have sold and then make adjustments for differences in quality, position and condition.
This gives you an independent view of value before auction-day emotion becomes involved.
2. Set Your Maximum Price Before the Auction
One of the most important decisions you will make happens before bidding begins.
Set your maximum price before auction day.
Not during the auction.
Not when there are two bidders left.
And not when the auctioneer tells you another $10,000 might buy the property.
Your maximum price should be based on your assessment of the property’s value and your own financial position.
Once the bidding reaches that number, you should be prepared to stop.
There will always be another property.
Paying substantially more than a property is worth simply because you have already spent money on building reports, solicitors and due diligence is rarely a good strategy.
3. Don’t Let Emotion Determine What You Pay
Auctions are deliberately designed to create urgency.
The auctioneer wants momentum.
The selling agent wants competition.
The vendor wants the highest possible price.
Buyers can quickly start concentrating on beating the person standing beside them rather than concentrating on the value of the property.
That is when problems occur.
An extra $5,000 can become another $10,000.
Then another $10,000.
Suddenly a buyer who planned to stop at $2.2 million has bought the property for $2.3 million.
The question is not whether you can make one more bid.
The question is whether the property is still worth buying at that price.
4. Understand the Vendor’s Position Before Auction Day
Auction strategy is not only about watching competing buyers.
The vendor’s circumstances can also influence how you approach the auction.
Where possible, try to understand:
- Why the vendor is selling
- Whether they have already purchased elsewhere
- Whether there have been genuine pre-auction offers
- How many buyers are seriously interested
- Whether contracts have been issued
- Whether the agent is encouraging offers before auction
- Whether the vendor appears committed to selling on auction day
You will rarely know everything.
But gathering as much information as possible gives you a better understanding of the situation before bidding begins.
5. Should You Bid First or Wait?
There is no single auction strategy that works for every property.
Sometimes bidding early and confidently can establish control.
Other times it makes sense to wait and see how the auction develops.
I regularly hear buyers being told they should always bid first, always bid aggressively or always wait until the property is called on the market.
Auction strategy is rarely that simple.
The approach should depend on:
- The property
- Your maximum price
- The likely reserve
- The number of bidders
- How quickly bidding is moving
- The behaviour of competing buyers
- Whether the property has been called on the market
The important thing is to have a strategy before you arrive.
6. Control Your Bidding Increments
Don’t automatically accept every bidding increment suggested by the auctioneer.
If the auctioneer asks for another $20,000, you may choose to offer $10,000.
Later in an auction, you may choose to reduce your increments even further.
However, very small bids can sometimes allow competing buyers time to recover and reconsider.
There are situations where decisive bidding is more effective.
There are also situations where slowing the auction down makes sense.
Again, there isn’t one bidding style that should be used at every auction.
You need to react to what is happening in front of you while remaining within the strategy you established beforehand.
7. Don’t Assume an Aggressive Bidder Has Unlimited Money
One of the easiest mistakes to make is trying to read too much into another bidder’s behaviour.
Someone bidding instantly may be close to their maximum.
Someone hesitating may have another $200,000 available.
You simply don’t know.
I have attended many auctions where one buyer appeared completely dominant only to stop unexpectedly after one more bid.
Focus on your own strategy rather than trying to guess another buyer’s financial position.
8. Know When to Walk Away
This is perhaps the most important auction discipline.
Walking away from an auction does not mean you lost.
If the property sells above the price you believe it is worth, walking away can be the correct outcome.
The dangerous mindset is:
“We’ve already come this far, so what’s another $10,000?”
Another $10,000 can become $20,000 or $50,000 very quickly.
Buying property successfully is not about winning every auction.
It’s about buying the right property at the right price.
9. What Happens if the Property Passes In?
A property does not always sell when the auctioneer’s hammer falls.
If bidding fails to reach the vendor’s reserve, the property may be passed in.
This can create another important stage of the buying process.
Generally, the highest bidder will be given the first opportunity to negotiate with the vendor immediately after the auction.
This is where the transaction changes from public auction bidding to private negotiation.
And the strategy should change with it.
The vendor may still be expecting a price substantially above the highest bid.
The buyer may be emotionally invested after participating in the auction.
The selling agent will be trying to close the gap.
You need to establish:
- What the vendor is now prepared to accept
- Whether there are other genuine buyers
- Whether you should increase immediately
- Whether you should hold your position
- Whether walking away could improve your negotiating position
A property passing in does not automatically mean the vendor will accept a low offer.
But it can provide buyers with a different negotiating opportunity.
What More Than 1,000 Sydney Auctions Have Taught Me
After attending more than 1,000 auctions, there are several lessons that continue to repeat themselves.
The strongest-looking bidder isn’t necessarily the strongest buyer
Confident bidding can be strategic. Don’t automatically assume another buyer has an unlimited budget.
The selling agent knows more about the competition than you do
The agent has spoken to buyers throughout the campaign and usually has a much clearer understanding of who is genuinely interested.
Remember who they are working for.
Auction momentum matters
Bidding can accelerate very quickly once two emotional buyers begin competing against each other.
This is why having a predetermined limit is so important.
The reserve isn’t the property’s value
A vendor can set whatever reserve they choose.
Your job is to determine what the property is worth to you based on evidence.
Sometimes the best purchase is the one you don’t make
If a property moves beyond reasonable value, walking away leaves you financially ready for the next opportunity.
That discipline can save buyers far more than any clever bidding tactic.
Should You Use a Professional Auction Bidder?
Some buyers are perfectly comfortable bidding for themselves.
Others would prefer an experienced buyer’s agent to handle the process.
Professional auction representation can be particularly useful when:
- You are uncomfortable bidding
- You are emotionally attached to the property
- You are buying from interstate or overseas
- You want someone independent to execute your strategy
- You want assistance negotiating if the property passes in
- You simply don’t want the pressure of bidding yourself
The objective isn’t to perform tricks or intimidate other bidders.
It is to approach the auction with research, discipline and a clearly defined strategy.
TBAS Auction Bidding Service
TBAS Buyers Agents can assist Sydney property buyers before and during auction.
Our Auction Bidding Service can include:
- Comparable sales and price analysis
- Property value assessment
- Maximum bid strategy
- Auction-day bidding
- Professional buyer representation
- Negotiation if the property passes in
With 30+ years of Sydney real estate experience and more than 1,000 auctions attended, Rodney McLoughlin can represent you throughout the auction process.
Buying a Property at Auction?
Don’t leave your bidding strategy until the auctioneer calls for the opening bid.
TBAS Auction Bidding Service — from $300 + GST.
Have a property going to auction?
Contact TBAS Buyers Agents to discuss your auction strategy and professional bidding representation.