By Allister Lewison,
The Karate Kid was pretty big in the eighties. Today, I want to talk about auctions and I’m going to relate it back to our old favourite guys, the Kobra Kai. Cam and I have been to a number of auctions over the years. The first auction we went to was a development out in Croydon. We were in our early twenties and it was a unit site we were investing in.
I’d say we were very naïve and at the auction we were swept off our feet by the more experienced bidders. We went there with the strategy of knowing how much we wanted to spend and I think it was about $250,000 for this big development site. When we got to our limit and they started looking at us to make another bid, we were whispering to each other, “Do you want to put in another five grand?” It was pretty obvious to everyone else that we had reached our limit and didn’t have any more money. It took one big knockout punch from the next bidder and it was K.O for us! Afterwards, we obviously learnt how to assess when other bidders were checking us out.
To put it bluntly, I think investors are silly if they buy investment properties at auction; paying more than everyone else for an investment, is not a smart way to go. In saying that, I have had to go to auction to purchase my own home and at some point you may have to bid at auction, so I’m going to introduce you to the strategy Cam and I use to buy our primary place of residence, at auction.
Remember the Karate Kid? It is all about Ralph Macchio, the Kobra Kai and their theory of how to take out a fight: strike first, strike hard and show no mercy. First, understand what you want to pay. We don’t hold back; we bid, then another bidder, then us. We get to our end point and then we’re out. It is very important to go with a clear strategy and limit, to bid as high as you can to that limit and then walk away. Don’t even worry what it went for if it is above your limit, just walk away. When Cam first said to me a couple of years ago, “let’s use the Karate Kid strategy,” I thought he meant Ralph Macchio walking around the shower screen in his skeleton suit… clearly not! He basically meant go hard or go home!