As the Spring market ramps up and with weekend auctions numbers clicking into the 1000s, bidding competition is intensifying.
With Melbourne’s market demand expected to continue to ramp up in the next 12 months, a successful auction strategy may be the difference between securing the property you’re after, or settling for something sub-par.
Auctions are a cornerstone of Melbourne’s property market, yet they remain one of the most misunderstood elements of buying and selling. Many approach them with rigid plans, only to find the process fluid and unpredictable. No two auctions unfold the same way, and success hinges not on total control, but on how you respond to shifting dynamics.
In this piece, we’ll break down the key players – the auctioneer/agent, vendor, and bidders – and explore how each can influence outcomes. Whether you’re selling or buying, understanding these roles can tip the scales in your favour, especially in a competitive environment.
The auctioneer/agent: The information gatekeeper
The auctioneer, often doubling as the agent, wields significant oversight. They interact with all parties, gathering insights into positions and intentions, which allows them to shape the narrative. This includes setting the quote range – aligned with vendor expectations, but ultimately their call on market positioning.
They decide the opening bid level, sometimes starting below or at the midpoint of the quote for strategic reasons.
Bidding increments are also under their discretion; they aren’t obliged to accept every offer, such as rejecting a $5,000 rise if aiming for $25,000 jumps. They control information flow too – deciding what details to share with interested parties or the vendor. They also determine if and when to insert a vendor bid to regain momentum or pass the property in, either on a genuine offer or strategically to open negotiations.
Their role is pivotal, but it’s not absolute. A skilled auctioneer uses these tools to guide the process, yet they must navigate vendor directives and bidder behaviour.
The vendor: Ultimate decision-maker, but timing is everything
As the property owner, the vendor holds the final say on whether to sell and at what price, setting the reserve based on agent advice but driven by their own convictions. However, misreading the auction can undermine this power.
Declare the property “on the market” too early, and bidding might stall, short of potential, forcing a sale below expectations. Hold back too long, and bidders may lose faith, assuming you’re not serious, leading them to sit out and force a pass-in.
To maximise oversight and control, vendors should demand a clear pre-auction briefing from their agent: profiles of interested parties, requested terms, past dealings, and possible scenarios (e.g., passing in on a vendor bid versus genuine offers). Position yourself to observe the auction. Ideally you’ll be able to see bidders’ body language and hear the flow – without being conspicuous.
Remember, auctions aren’t always the endpoint; they can be a campaign phase. A pass-in isn’t failure – it might yield a better post-auction deal.
Stay calm, trust your preparation, and view the process holistically.
The bidders: Agility and observation win the day
Bidders face the most variables, split between controlling your own actions and influencing (or outmanoeuvring) others. You can’t dictate rivals’ moves, but you can seize moments to shift momentum.
Key controllables include when to bid – opening strong, waiting for others, or jumping in post-declaration.
Choose increments wisely (though the auctioneer may veto small ones) and vary frequency: bid early, drop out, then re-enter to disrupt rhythm.
Positioning matters – stand where you can see most of the crowd and auctioneer without turning, ensuring you’re visible and not overshadowed by competitors. Be ready to reposition before bidding starts.
Observe body language for tells: a bidder shifting from confident, rapid offers to hesitant pauses or smaller increments often signals they’re nearing their limit. Watch for distractions, like consulting a partner, or fidgeting – these may indicate waning resolve.
If the home is passing in within your budget, ensure the property passes in to you. Don’t wait for it to be declared on the market if that risks letting it sell beneath you or opening negotiations to all. Bidding against yourself isn’t ideal, but losing exclusive rights post-pass-in hands control to the agent, or a competitor.
Post-auction, avoid going inside immediately – if the property passes in to you, stay out front to gauge the crowd. Are there eager competitors lingering or just family and neighbours? This preserves your observational edge and may help inform and fine tune your negotiation tactics.
Be genuinely prepared to walk away; it’s a powerful tactic that signals resolve to the agent and vendor.
But check your ego: if the price is close to what you’d have accepted pre-auction, don’t let pride scuttle a deal. Empty threats erode your leverage, while overconfidence can lead to regret when new buyers enter later.
For more insight into auction bidding dynamics, read out previous blog: Bidding techniques to win property auctions
ON GROUND CASE STUDY
When walking away wins
A few years back, we advised a client on an investment property in East Melbourne. The auction saw moderate competition – two other bidders – but stalled $5,000 short of the quote’s top end. We ensured it passed in to us, securing negotiation rights.
The auctioneer revealed a reserve $50,000 above the quote – a common push for more.
But the vendor seemed unreasonable, refusing to budge even when we offered the quote’s top. Sensing no engagement, we walked – genuinely, as our client sought an investment and was open to alternatives.
We went silent, not chasing. Within an hour, the auctioneer called, proposing a $20,000 rise. We declined, reiterating our limit. Half an hour later, they accepted our original offer.
This outcome stemmed from disciplined strategy: securing the pass-in, walking credibly, and letting pressure build on the vendor. The property has since leased consistently at strong yields, proving a solid long term purchase with good growth.
Take home message
Auctions thrive on unpredictability – no preconceived plan survives unchanged. Whether auctioneer, vendor, or bidder, focus on adaptability: read the room, respond decisively, and remember no one holds total sway.
Approach your next auction with these insights, and you’ll be better equipped to navigate whatever unfolds in the moment – to help you lock in long-term growth for years to come.
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