This week I got to chat with legendary auctioneer Matt Shalhoub.
Matt is the real deal. He’s called more than ten thousand auctions on properties ranging from $600,000 to $6m and as such he has seen many many bidding strategies and taken note of which ones consistently seem to perform.
He very kindly shares his insights with me in the video interview above and it’s interesting to note just how important he believes preparation and planning and mind set are.
First, Matt believes it’s a sound idea to have two bidding limits ready; one being an ‘ideal’ budget, and the second being the ‘absolute maximum’ budget. The idea here is to know when you’e getting a bargain, but to also recognise how far you may have to go, and to prevent emotions tricking you into overpaying once you’re in the higher numbers.
Matt is a big believer in starting strong too. He often sees bidders who like to leave it to the end of the bidding to chip in but he sees this strategy fail more than succeed and his reasoning is two fold. The first reason is that bidding confidently from the start gives bidders a stronger psychological advantage, and a commitment to the process and buy. The second is he sees this approach often eliminates some bidder competition, and even one or two less bidders in the mix can dampen the final price. It’s interesting that bidding, and being part of the process can lead to a better outcome and a lower final price, than holding back, because the art of being convincing does actually deter other bidders in a real life situation.
Matt can’t emphasise enough how important pre auction day preparation is. In particular he thinks a lack of communicating with the selling agent is a common mistake yet it is so important. He says the selling agent is your ally in an auction situation and letting them know early what your intentions are (not your price, just your interest) means you are involved in pre auction negotiations, if any, and also post auction negotiations if the property is passed in.
Bidding psychology was a big part of Matt’s wisdom. He urges bidders to recognise the self talk and decision making processes in the final moments of the auction and recalls a common situation where bidders simply stop bidding due to fatigue, when they may be one more bid away from a close. Having to bid many times leads bidders to believe they are paying more because they’ve psychologically confronted the number ten, twenty, maybe thirty times.
Perhaps my favourite piece of shared wisdom is Matt’s recommendation to avoid second guessing the value of a property based on competition. The value has to be the value you decide for yourself, and what you are prepared to pay. Remember that a new market value is set by the winning bidder the moment the hammer falls, and if you really want the property, do everything you can to make sure that value is set by you.
My bid at auction service is a very accessible option, and well worth the investment especially if you have spent minimal time in auction conditions. It really is a high stakes high pressure environment, where mistakes can easily be made. You’ve spent months of hard work to find that ideal property and it will all be for nothing if you can’t get the deal over the line on auction day. Remove the risk and give yourself every chance of success by hiring me to bid on your behalf on auction day.