Knockout bid auction strategy
Sometimes before an auction, if you have worked out that there are a lot of interested parties and you feel it would work, you can use a ‘knockout’ bid to secure a property. If the agent has been quoting $700,000 plus and you know the property is worth $850,000-$900,000, open the bidding at $850,000 or let someone start off at $700,000 and when the auctioneer calls for a rise of $10,000, offer $850,000. Not everyone will be ready for this and often knockout bids can have the desired effect of eliminating the competition.
This auction strategy was used just last weekend when we live tweeted a Coburg auction. The agent quote was $500,000-$550,000. The first and only bidder secured the property with a knockout bid of $600,000 which was 20% above the lower agent quote.
The realAs prediction was only 2% off.
— realAs.com (@getRealAs) January 31, 2015