In order to be successful at property auctions, you need to have some sort of bidding strategy. There are plenty of shows on TV that showcase people at real estate auctions, and they all have a different way of approaching their bids. You will eventually come up with your own unique style if you determine that this is a way that you want to buy property, but the tips below might give you a good starting point. Here are some different bidding styles for commercial real estate auctions.
Set A Budget Ahead Of Time
Before you get to an auction, you need to know how much money you are willing to spend for each property. It is easy to get caught up in a bidding war and try to purchase something for more than it is logically worth. Create a budget for yourself and stick to it, even if it means giving up on a property for only a few thousand dollars extra. This is a practice that will inevitably save you money in the long run.
Wait For Someone Else To Initiate The Bid
You may be tempted to jump into a bid because you really want a property, but doing so shows other bidders your enthusiasm. It may cause you to spend more than you should for a property. It is also wise to let someone else initiate the bid because the first bid may go down if nobody speaks out. You may even go as far as to let a property go unsold and then talk to the auctioneer afterwards about making a cash offer. This is a great way to get a really good deal on a property that may be underestimated.
Use The Scare Tactic When Appropriate
Sometimes, it is best to just assert your authority from the beginning. Come in with an incredibly strong offer if you want to show other people that you mean business. This can be a risky strategy because you may bid way more than you would have needed to if you went up in increments, but if you are having difficulty getting people to respect you at the auction, this can help establish a stronger reputation for you.
Make Friends With The Auctioneer
It always pays to have a good relationship with the real estate auctioneer because he will let you in on special deals that you may not be able to see otherwise. In the same regard, it is a good idea to get on the good side of banks in the area that may have property coming up for auction. If you can get the inside scoop, you might be able to come to an auction with very few bidders, and ultimately get a good deal on commercial real estate.