Buying at auction? Here’s what you should know.
If you haven’t bought a property at auction before, it can appear a daunting experience. But rest assured there are some tips when it comes to bidding and buying at auction that will help you get the result you desire and secure the home you want.
So, if you’re ready to buy at auction, here’s what you should know…
The benefits of buying at auction
When it comes to buying and selling property, auctions (either in-person or online) are the most transparent method available.
After all, as the buyer, you have the opportunity to see how many people are interested in the property and exactly what they’re willing to pay.
Auctions also often allow you a shorter time frame between purchasing the property and moving in, but there are a few tips and tricks when it comes to bidding successfully and securing your new home.
Line up your finances first
If the hammer falls and you’re the final bidder, that property is yours, so you need to ensure your finances are well and truly lined up in advance.
Talk to your lending institution about approval and they will advise you of exactly how much they’re willing to lend you. You should have this pre-approval at hand prior to auction day.
If you’re successful on the day, you will need to provide a 10 per cent deposit immediately, so you need to have this money at the ready.
If you’re the successful bidder, the property is yours, no matter its condition. That means you should inspect the home carefully in advance and have any pest or building inspections undertaken to set your mind at ease.
Auction rules can vary a little around Australia, depending on what state or territory you’re in.
For example, in some states you need to register as a bidder before you an actually take part in the auction. If that’s the case, you will need to provide identification, such a driver’s licence or passport.
Overall, however, the bidding process is similar. The auctioneer will start the auction by calling for opening bids.
Then once there’s an initial bid on the table, the price will start going up in increments, depending on what bidders are willing to pay.
To bid, you simply raise your hand or a paddle you have been issued when you registered as a bidder. If you’re not comfortable biding, you can nominate someone to do it on your behalf.
Know your limit
Auctions can move at a fast pace, and it’s important you don’t get carried away and bid beyond your financial limit.
Meanwhile, it helps to go in with a strategy of how you’re going to bid. Some people like to start out strong, others wait quietly until the bidding begins to wane and then kick in with their offer.
Some will increase their bids in large numbers, others will attempt smaller increments. There is no right or wrong way to bid, but remember to remain level-headed, calm, and stick to your limit.
Understand the process
Auctions come with their own process and terminology, and it pays to familiarise yourself with how they work in advance. You should attend some auctions prior, or perhaps watch some online.
You can also speak with the selling agent to understand exactly how the process is likely to work on the day.
Looking to buy or sell? Why not view the properties we currently have available for sale here.