ooking to buy, sell or invest, or just want to know how much your property is potentially worth? Auction results is a good way to do this and gauge what the market is doing. Auction clearances recently, especially in Sydney, has broken through the
Buying a home at auction can be an exhilarating experience, but it can also be nerve wracking especially if you get caught-up in the heat of the moment and bid beyond your budget. This is why its vital that you remain cool, calm and collected, during an auction. This way youll buy within your means and not push yourself beyond your limits.
Auctions are not the same as private treaty sales, there are no negotiations between a buyer and a vendor, cooling-off periods or subject to buying clauses that can be inserted into the contract. So you need to be certain of your purchase before you make a bid.
Before You Buy at Auction
There are a number of pre-auction aspects that you need to take care of to ensure that youre buying a sound property that has an acceptable contract. The most common aspects are:
1. Property inspections – If youre keen on the property, then ask to have a pre-purchase inspection done, such as pest and building inspections, which need to be done prior to auction. These allow you to identify problems and to contact a builder to find out how much it will cost to rectify any issues. Knowing of any problems a property has may see you forego bidding on the property altogether or reducing your price limit based on the costs to fix the property.
2. Get legal advice Have a solicitor review the contract prior to you signing it. You must read the contract and have a solicitor review this to ensure that there are no hidden surprises if your bid is successful.
3. Organise home loan approval Bidding at an auction without knowing what you can afford to buy is a very risky strategy. So rather than adding to your financial stress, contact your lender or mortgage broker and arrange for finance prior to the auction. This will then allow you to set yourself a bidding limit.
4. Set a bidding limit Once you have home loan approval you can bid at auction with certainty. Dont go over your pre-approved home loan amount and make sure you do your research before you bid on a property. This means looking at homes in the area before the auction and looking at sales data for at least 3-months prior to the auction. This will give you a good indication of what prices homes in the area are selling for. If the home youre interested in goes over your budgeted price then let it go. Another property you like, which is affordable, will come on the market at a later date.
5. Register to bid Ask the agent selling of the home youre interested in if you need to register to bid. If you do, and youre still interested in buying the property after conducting your inspections, then register.
6. Make sure you have your cheque book with you When you go to the auction, make sure you have your cheque book with you as youll need to pay 5 to 10 percent of the purchase price, on the day, as a deposit. On a $300,000 home this equates to $15,000 to $30,000.
How to Win at Auction
There are a number of tactics that you can use at an auction to give you an advantage over other buyers. The most frequently used and beneficial tactics are as follows:
Look professional Wearing your power suit can intimidate other buyers. It also makes you appear professional and serious, which can give you enough of an edge to get the right price and secure the property.
Be noticeable Arrive in a stylish and well-presented car and make sure your seen alongside it. This plays on the minds of your bidding opponents. It also pays to be in a position where you can see your other bidding opponents during the auction. When you bid make sure you say your figure confidently, this will rattle the inexperienced. Say the full figure $320,000 not $320. This plays on the other bidders minds as $320,000 is a big number and this can be enough to put off the other buyers.
Dont rush in too quickly You want to pace yourself when bidding. Keep your bid limit secret and dont give the agent any ideas of where your limit is situated, otherwise theyll play the auction to get a better result.
Dont bargain with the agent Rather than getting caught in the reserve has not been met game, only bid up to the price you think the property is worth and then let it pass in. You can always negotiate a better price with the vendor after the auction has finished.
Time your bid Dont wait until the end of an auction to make a bid as the agent may close the auction before youre able to put in a bid. But by making an earlier bid, you may get to negotiate if the reserve is not met.
Enlist the help of a professional If youre worried youll get caught-up in the emotion of buying, then ask someone you trust to bid on your behalf. This can be a friend, family member or even a buyers agent.
If you hire a buyers agent, then make sure you know what the costs are before you use their services. Otherwise you may find that they cost you more than you bargained for.
Are you looking to secure a home loan prior to auction? If so, then contact eChoice, we can help you find the RIGHT mortgage.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!