Highlights in this issue:

*** 30 seconds is all it takes – My top tip to ensure you don’t get swept away by the excitement…
*** 4 key things to do before the bidding starts…
*** Why you want the lowest number…

-----------------------------------------
From the pen of Karin Iten…

Dear Investment Academy Reader,

There’s nothing like the thrill of an auction. On the day, hundreds of lots will be up for auction. And that means being successful all comes down to your ability to think fast and react even faster. It’s an aggressive and utterly nerve-wracking experience – especially if you’re a first time bidder. But there are ways to make the experience a lot easier…

4 things to do before the bidding starts:

*** View the catalogue – Auction houses generally release their auction catalogue about a month before the auction. So, if you’re interested in attending – and possibly bidding on a piece – get your hands on a copy. These days, most catalogues are available online. So once you’ve downloaded your copy, run through it and mark all the lots you’re interested in.

*** Attend the preview – Since most lots sell in about 30 seconds, it’s important to attend the preview and give yourself plenty of time to properly assess the item. Check the item for damage and signs of restoration. Handle it as much as possible and look at it from every angle. Any irregularity can seriously hamper the feasibility of buying the piece as an investment. And remember, most auction houses don’t have an exchange or return policy. Once you buy it, it’s yours. So make sure you like it. If you have any questions about any of the items you’re interested in, the preview is the perfect time to approach a house specialist. They’ll be too busy to give you an in-depth answer on the day of the auction.

*** Set a maximum price – With all the hype of auction day, it’s easy to get carried away in the thrill of the chase. That’s why you need to set a maximum bid before the day. So go online and do some research. Check how much items of similar quality and from similar periods have fetched in the past and determine how high you’re willing to go. A site like www.artprice.com will be able to help you with your research.

*** Pre-register – Don’t forget to pre-register for the auction with the accounts department. To do so, you’ll need to give them your name, address and, in some cases, your bank account details. They, in turn, will give you a paddle or bidder number. By pre-registering you’ll not only be able to walk straight into the auction on auction day (a useful thing if you’re running late), but you’ll also get a lower bidder number. If there’s a tying bid on the day, the auction house will use the lowest bidder number to break the tie.

What to do on the day of the auction:

When a lot you’re interested in is called, the auctioneer will ask for an initial bid – usually at the predetermined opening bid price you’ll find in the catalogue. If you’re a novice investor, don’t open the bid. You don’t want “phantom” buyers to chase the price up because they can tell you’re overeager. 

Once the opening bid’s been placed, bidding will move in standard increments – usually 10% of the initial price. So if the initial bid was R1,000, you’ll need to raise your bid to R1,100 to be in the running. If the auctioneer can’t get a bid for the initial price don’t panic, in this case the auctioneer will drop the asking price by about 1/3 to drum up interest.

To raise your bid by the allotted 10%, simply raise your paddle and make eye contact with the auctioneer or one of his assistants. If, on the other hand, you want to raise the bid by an increment different from the standard raise – say up the price by R500 – then you’ll raise your paddle and call out your bid.

As the bidding winds down, the auctioneer will ask for a final bid. Once sold, the auctioneer will close the bidding and acknowledge the sale by calling out the bidder’s number and adding a description so you know if you’ve won the piece or not.

You then need to go to the accounts department after the auction and settle your bill. Give them your bidder number and check all the lots on the bill are yours and no items are missing. Remember, once you’ve successfully bid for an item, it’s yours. And you’ll have to pay for it. So make sure you have enough money in the bank to pay for it.

Here’s to your financial freedom,

Karin Iten
For the Investment Academy