Attend lots of auctions
You will only be able to understand the auction process after you attend numerous auctions. At every auction people ask me what I am going to do and I can honestly tell them that until a minute or two before the start of the auction, I could not say what I am going to do.
I attended an auction of a family home in suburban Melbourne, right in the middle of the private school belt. Because the house was large and had five bedrooms, there was a lot of genuine interest. The property was worth up to $1.5 million, with the agents quoting $1.3 million plus. The auctioneer called for an opening bid of $1.1 million and asked for rises of $50,000. I jumped the bidding by $200,000, which startled the auctioneer. I also followed up with a question: ‘Are you now in a position to sell the property?’
This question stirs every auctioneer. The auctioneer promptly replied that he wasn’t in a position to sell and called for rises of $10,000. I responded that his firm had been quoting $1.3 million plus and suggested that he refer the bid to the vendors! By breaking the bidding down from $50,000 to $10,000 lots, the auctioneer was sending the message that he was getting close to the reserve but wasn’t there yet. However, my antics slowed the bidding down so that he was forced to refer the bid. The property was put on the market for unreserved sale.
Once the property is put ‘on the market’, you are playing for keeps and every bid that is made by someone else ultimately costs you money. In this case, I was bidding briskly against one other person. I walked over to him and theatrically offered to toss a coin with him for the property. It was just the break in concentration that was needed and I asked: ‘Why can’t you toss for it? I am either going to cost you $200,000 or you will cost me $200,000.’ I could see he didn’t have another $200,000. After one more bid he declined to bid any further.
If I had not pretended to be offhand with my client’s money I am quite convinced it would have cost another $100,000 to secure the property.
– David Morrell