Take a step inside a busy auction room and you are bound to feel the tension and anticipation — even if you're not bidding.
Stepping into a Harcourts auction in Epsom, the real estate agents spot me a mile off. None has taken me through their client's properties and so are keen to say hello. These auctions are open to the public. Whether you are "spying or buying", you are made welcome.
Robert Tulp, "The Auction Guy", recommends home buyers go to a few auctions before they arrive to put their hand up.
"Bidders must have a strategy. It's almost like going into any sporting field where you'll just see how it goes. If you walk in and see how it goes, you will get beaten," says the Harcourts Charlton Realty auctioneer.
He says 80 to 90 per cent of Auckland home sales go through an auction so it pays to be familiar with the process. It's a simplified process for the seller because buyers have already agreed to their terms. Bidders make unconditional offers and need to have done their homework before they commit to buying.
During the Harcourts auction, Tulp is methodical and deliberate as he steps each property through the auction process and allows time for phone bidders to speak to their agents and decide whether to bid.
There are about 20 people in the room and another two or three taking part by phone. At least two people are helped by translators.
Tulp says most bidders set themselves two financial limits — the amount they feel comfortable spending, and the amount they are capable of spending. Tulp says you need to skip the first limit.
"The people who are doing well in the market at the moment are those who are literally taking a little bit of a leap of faith," he says. "They should buy the property and make a lot of money on it."
But to buy a property, it has to be on the market. Though bids can be placed, until the seller's reserve price is met, the house is not "on the market".
Bidders must have a strategy. It's almost like going into any sporting field where you'll just see how it goes. If you walk in and see how it goes, you will get beaten.
I watch as bidding stalls at $2.43 million for a home at 18 Bradford St in Parnell, a property that featured in Herald Homes on August 8 with a guide price of $2 million-plus.
The highest bidder is invited to a private meeting with the seller to thrash out a deal. We wait for 15 minutes, listening to music pipped out of speakers and Tulp makes jovial comments to keep the mood light.
"My job is not to throw fuel on the fire. It is a stressful enough process anyway without the auctioneer adding to that. My personal style is conversationalist and light-hearted," says Tulp.
He has seen people so stressed they literally cannot move. Bidding at an auction is nerve-racking even for those bidders who seem confident on the outside.
The buyer and seller for the Bradford St home eventually emerge having agreed to a market price of $2.6 million. This requires the seller to lower their reserve and the bidder to increase his bid. But it's not over yet.
The highest bidder gets the first option at the new reserve price of $2.6 million. But he must go back in the dealing room where Tulp officially declares the property is on the market.
Tulp tells the bidder to keep breathing as he makes the final countdown for any challengers and then declares the property "sold".
"Every auction has a little surprise package in it," says Tulp. "I do 550 to 600 a year. I've done it for many years. I still get surprised every day."
The bidders at today's auction intend to be owner-occupiers. Tulp says that's true for about 70 per cent of the homes he has a hand in selling.
Some bidders at this auction start strong but don't finish. Others start bidding late in the process when others drop out. Some dress up and some are in work boots.
"People have their fate in their hands. The competition is transparent and they can stop when they like," Tulp says.
James Marshall, director at Harcourts Charlton Realty, says it's important for buyers to see who they're bidding against.
He says: "You can see that the market value is speaking in respect of where the property is because ultimately both vendors and buyers don't know what the property is worth."
Marshall says auction houses have replaced curb-side sales partly because of the convenience. Auctions at people's properties can have issues with weather and parking. A dealer room also offers private offices for negotiating.
There is no requirement for buyers to register with the auction house beforehand, but it is recommended. The deposit must be paid on auction or by the following day.
"We always encourage people to give us a firm signal if they have an interest in the event something may change. The auction may be brought forward and the property sold without them even knowing," Marshall says.
Before an auction, buyers need to study the LIM report and the title of a property carefully. A building inspection is recommended and professional legal advice is a must.
Some people may be nervous that touching their face could be interpreted as a bid. But Marshall says not to worry.
"You can always retract your last bid. So, a nervous scratch is not going to get you a property."
Harcourts auction snapshot
• 34 Saintly Ln, Avondale: sold for $579,000 (CV $400,000).
• 41 James Laurie St, Henderson: sold for $855,000 (CV $620,000).
• 25c Thornlow St, Glendene: sold for $715,000 (CV $270,000).
• 222 Kilkenny Drive, Howick: sold for $1,150,000 (CV $790,000).
• 117 Millhouse Drive, Howick: sold for $948,000 (CV $930,000).
- Source: Harcourts