Auctions - what you need to know as a buyer.
Property auctions are most common on the east coast of Australia, as seen on real estate and home improvement television programmes and they are now becoming more popular and even recommended when selling your home in the Perth property market. Private Treaty (the traditional method of selling homes) can be slow and predictable. Auctions have a shorter selling time and work well when properties are unique or the market prices vary dramatically from suburb to suburb. For the seller, an Auction is a short term-high impact marketing campaign ending in the bidding process with the home being sold (all being well) to the highest bidder.
But what do you need to know if you are buying a property through the auction process? To be the successful bidder at a property auction, not only must you have the highest bid, you must have your finance formally pre-approved through a Mortgage Broker or lending institution. The terms and conditions of a sale at auction usually state finance must be approved, verified with a bank approval letter and a substantial deposit paid on the day of the auction (can be around 20% of the purchase price unless otherwise agreed) with a 28 day settlement. This means, no time to get your finance approved, it’s straight to the settlement procedure.
By having your finance pre-approved with any property transaction puts you in a more powerful position to negotiate, but having it pre-approved before Auction Day makes you a genuine bidder. The bidding process is exciting when you know you are already approved for the home loan, have your finances in order and are just waiting for the hammer to fall on the third and final call of the Auctioneer!
If you are pre-approved with finance and don’t want to miss out on your perfect home, you may approach the real estate agent to make an offer on the property prior to Auction Day. If your offer matches the seller’s Reserve Price and is accepted by all parties, it will alleviate the auction process and there is no need for bidding.
To find out more about having your finances pre-approved for an auction or for purchasing your next home, contact Brett on 0407 249 567 for further information, or call into our office on Main Street in the heart of Ellenbrook.