Buying a home at auction
7 tips for success at auction.
First things first – get your pre-approval sorted.
We know how it feels – you find a great place, and you just want to make it yours. But before you start launching into bids, it’s worth getting a clear picture of what you’re playing with.
We can help you get pre-approval on a loan, so you know just how high you can really bid – and what that will look like in terms of repayments. Our brokers not only speed up the process, they know each lender’s criteria, and who’ll lend you the amount you need.
Don’t go in with your eyes closed.
The last thing you want when you’re buying a property is surprises. So it’s super important to get your eyes over the building and pest reports well before the big day.
Issues like roof leaks or cracks in the wall could be no big deal, or an absolute deal-breaker. And it’s up to you to find out. Remember, the more you know, the stronger position you’ll be in to make a good decision on auction day.
Ask the sales agent for the reports, and if they can’t supply them, get them done yourself – it’s totally worth it.
Know what’s hiding in the fine print.
Once you’ve made the winning bid, you’re expected to sign it there and then – so it’s important to do your ground work ahead of time.
You and your solicitor should go over the details so you know exactly what you’re bidding on. For instance, are there furniture, fittings or extras included?
Make sure you know the answers to all these questions before you get the paddle in your hand.
Know your limits.
It’s so easy to get a bit carried away in the heat of an auction, so the smartest thing you can do is set yourself a concrete bidding ceiling before you arrive.
Know your budget. Know your pre-approval amount. Know what each jump in bid will cost in repayments. And know the number you will not go past, even if it breaks your heart.
A good tip is to set your final price as an uneven number – so it’s much less likely you’ll have the same limit as anyone else. When it comes down to it, that uneven number could be what wins you the auction.
Get in the game – officially.
You can’t just turn up and start bidding. In some states if you’re planning on raising a paddle, you’ve got to register to bid – before or on the auction day – with some I.D to prove you’re really you.
Couple of tips here: be sure to ask if there are any changes to the contract while you’re registering; and consider having a friend or family member bid for you, if you think taking emotion might get the better of you. Just remember if you do decide to have someone else bid for you, they’ll also have to register.
Keep your cool as things heat up.
This is it. The big moment. And as bids start getting thrown around, this is the time to take a few deep breaths and remind yourself of the game plan.
Try not see it as a competition, but as a gradual process of moving towards your price ceiling. It isn’t a race, and it isn’t personal. And know that every bid you make is a very strong indication of your interest in the property.
And while you don’t get told what it is till after the final bid, it’s worth keeping in mind that the vendors will have a reserve price they want to sell for. If your winning bid comes in below it, you might have to negotiate for a fair compromise.
It can be a really good idea to take your broker to the auction if you can. Because they’re so familiar with your financial situation, you can rely on them to give you the green light to continue bidding within your budget, and the red light should it be needed.
Have your deposit handy.
Make sure you have your deposit sorted in advance, because you aren’t winning an auction without it. A deposit is usually 10% of the purchase amount and is taken as a cheque, and seeing banks aren’t open on weekends... You get the idea.