Know your auctioneer

Most buyers would approach an auction with trepidation and caution. Plenty don’t have a firm plan. And very few would be on first-name terms with the auctioneer, but they should be.

In most cases, we make sure we meet and greet the auctioneer every time before we bid. Knowing the listing agent and being familiar with potential rival bidders is important, but this isn’t enough for a professional bidder who likes to have a firm grip on the task they are facing.

Auctioneers are human, and like us all, they have their own quirks, style and approach. Missing the chance to meet them before an auction limits our ability to have influence on the auction itself.

A quick chat, a smile and a handshake can go a long way.

The auctioneer will likely give us insight into the reserve price, or they may appreciate our offer to kick off the bidding. But there is far more we can glean from a robust and friendly two minute chat than people imagine.

We may discuss their appetite for Vendor bids and have an agreement for a limited number of such bids, or a verbal agreement on the momentum of bids and increments of each at the start. Many times, I’ve made a handshake deal with an auctioneer prior to auction that they won’t place a vendor bid over my live bid of $x, or I’ve pre-determined the opening bid and the magnitude of increments they’ll ask for following my bid.

They don’t call it street theatre for no reason.

Our rationale for a friendly chat isn’t only about seeking a hint on the reserve, or striking agreement on starting bids and increments though. It is deeper than that. We are assuring an auctioneer that we are there to buy, completely confident about the task at hand, and willing to play fair with them.

We want them to know we will be placing a bid and we need their attention when the bidding is underway. Whether we aren’t loud enough, or other bidders are distracting the process, we always want our bid to be noticed.

Plenty of bids are missed when a buyer is quiet and the auctioneer isn’t looking their way. A savvy agent in the crowd can’t always notice a quiet bidder, and we’ve witnessed lost bids of others’ many times over the years.

We never, ever want our bid to be missed. Being overt about the fact that we are bidding ensures the agents won’t miss our bid.

A very important reason for getting to know the auctioneer relates to their style when they conduct the auction. We have seen so many varying styles over the years, and some auctioneers can take bidders by surprise with some of their antics. Yesterday’s auction was indeed an interesting case in this regard.

The auctioneer was approachable, friendly and shared with me the reserve price before the auction commenced. We agreed that I’d likely place the first bid, (pending any confident bidders who could be excited at the prospect of pouncing out of the blocks quickly). I knew what the increments would be and I knew I had two opponents in the crowd so I positioned myself accordingly.

What I didn’t anticipate was his reluctance to reject my smaller bids once the property was announced ‘on the market’. Most agents will keep the pace of the auction firm and fast before a property reaches reserve, but it is widely accepted that once bidding has reached reserve, they will accept any increase, regardless of the increment.

After he had announced the property on the market at $1.55M after $25,000 increments, my $5,000 bid was knocked back.

“No Madam. I’m calling for twenty-five. I won’t take fives.”

I stood firm. He called for twenty-five thousand dollars and I shook my head. The crowd gasped. He bellowed out the first auction call. I stood firm. What to do? This could have become a dangerous Mexican stand-off. No doubt my buyers were anxious. I had plenty of budget remaining to bid, but I really wanted the increments to be slowed down so that I could apply my strategy. My opponent was aggressive and the bidding war could have easily become an irrational race to the finish line for him if I couldn’t slow things down.

On the third call, I addressed the auctioneer loudly by his name and firmly said “I’ll place a five thousand dollar bid.” Obviously I didn’t want to tempt him to knock the property down to the other bidder out of defiance, but I also didn’t want to yield to the higher increment.

He too was in a precarious position. His vendors would be inside, staring out the window and wondering why he’d dare to stop the auction and undersell their property when a Buyers Advocate has already made it clear she had five thousand dollars more than the current bid.

Our previous friendly chat would have given him confidence that I was not only there to buy, but also willing to play a fair game. He suggested a ten thousand dollar increment, (to which I agreed) and the auction continued again.

The questions from buyers in the crowd afterwards were interesting. People assume that an auctioneer must take any bid, but the law states otherwise, and it is vital for bidders to understand this. I explained to them that he wasn’t breaking any rules and he did hold the power to make that decision, as precarious as it seemed.

The reality is that we are absolutely at the mercy of the Auctioneer in times like this. A head to head battle can lead us down a difficult path if we let ego get in the way. I’ve seen auctioneers refuse bids and knock a property down to an alternative bidder before.

It’s their auction, and their rules.

Some auctioneers have a reputation for a fast auction call, ie. a very rapid “going once, going twice, third…. and FINAL call… SOLD!” Others will drag it out and elicit bids for as long as humanly possible. Bidders need to be mindful of the differences, because a fast final call can catch out a bidder who might think that holding back to place a bid until the final call is a good tactic.

The second auction rule applies for good reason. It exists because plenty of bidders make their bidding attempt too late in the auction call.

It’s a devastating blow for a bidder to make this blunder and see the hammer fall to an opposition bidder.

Befriending an auctioneer and establishing how they are likely to run things has plenty of advantages, and very limited flip side. There are very few cases where we would choose to approach things differently.