James Pratt is renowned as one of the world's most exceptional real estate auctioneers, boasting an impressive portfolio of 107 highest sale price records for real estate auctions spanning the United States and Australia. With a remarkable career, James has earned the esteemed REB Australian Auctioneer of the Year Award four times, solidifying his expertise in the field. In 2019, he made history by becoming the first person worldwide to conduct a real estate auction via a live auctioneer with cryptocurrency.
In 2012, James founded JPA Group, a prominent real estate auction company that has successfully orchestrated over 11,000 real estate auctions globally. Notably, he spearheaded the ground-breaking $200 million Caribbean luxury auction event in 2020, propelling his reputation even further.
Presently, James occupies advisory positions on several real estate boards and serves as the CEO of James Pratt Auctions Group, headquartered in both Beverly Hills, California, and Sydney, Australia.
Given his award-winning expertise, we approached James to share his top eight pieces of advice for buyers participating in real estate auctions in the United States.
Ask the Questions
Before auction day, inquire with the agent about the number of pest and building reports issued for the home, as well as the total number of contracts issued on the property. This information provides a more realistic idea of the level of interest in the home, eliminating the need to rely solely on the number of people attending open houses.
Make an Offer Before Auction Day
If you find a property you like, consider making a strong offer before the scheduled auction day. In the past year, areas like Miami, Los Angeles, and New York have witnessed months where up to 35% of auction homes were sold prior to the auction itself.
Have a Game Plan
Approaching auctions with a well-defined game plan can make the process much easier and less unpredictable for buyers. It's wise to research the local area, including recent sales and current listings comparable to the property of interest. Additionally, inquire about the auctioneer's identity and see if there are any auctions you can observe beforehand to gain insights into the auctioneer's style and pacing. Set a spending limit for yourself and be prepared to walk away if the bidding surpasses that amount. Remember to bid with your head, not your emotions.
Start Strong! Aim to Minimize Competition
When the auctioneer calls for an opening bid, instead of waiting for someone else to start, make a knock-out bid to initiate the bidding. This strategy may eliminate some of your competition and establish you as a confident leader in the auction. By setting the tone right from the beginning, you encourage others to follow your lead.
Maintain a Poker Face and Exude Confidence
While couples searching for their family home often show more emotional attachment, investors tend to be less emotionally involved. It's crucial to maintain a composed demeanour and avoid revealing too much emotion. By doing so, you make it harder for other buyers to bid against you, and it prevents the auctioneer from reading your body language.
Leverage Your Agent's Assistance
If your English proficiency is not perfect, it's acceptable to ask the agent to write down the price or clarify the current bidding amount as the auctioneer calls the bid. This gives you extra time to gather your thoughts, control your emotions, and navigate the auction more effectively.
Challenge the Auctioneer
When the bidding increments are fixed, such as $100,000, instead of placing a lower bid to slow down the auction, opt for an uneven increment like $97,500. This tactic disrupts the auction's flow, forcing the auctioneer to reconsider their bids. By introducing irregular increments, you gain more control over the pace and provide buyers with an opportunity to assert their influence.
Secure the First Right to Negotiate
If a property fails to reach its reserve price during the auction, don't lose hope. As a courtesy, many real estate offices offer the highest bidder the first right to negotiate and submit an offer after the auction when the property is passed in. This advantage is particularly significant in markets where the vendor's selling expectations are often highest on auction day.