Hot Auction Buying Tips
23 Jun 09
Hot Auction Buying Tips
The most important thing to remember is that at an Auction, when you buy a property, there is no cooling off period like there is when you buy 'for sale'. The Auction sale is legally binding on the day.
These tips should help you with understanding the Auction process.
1.
Establish the property’s worth and how much you can pay for it. Research recent sales, talk to agents, explore the neighbourhood and speak to neighbours. Use your research to set yourself a price limit and stick to it! Once you've set your limit, never bid above this price.
You might have your heart set on that home and feel you have to have it, but there's no point getting in over your head. It is valuable experience to attend as many local Auctions as you can to see how the Auction proceeds.
Observe how people bid, and who is at the Auction. Work out people's style of bidding. The same people may be bidding against you for your property in the near future.
By the way – don’t set your limit at a round number, because most people do. So while the opposition may stop at $605,000, if you are prepared to bid to $606,500 that extra bid may just win you that property.
2.
Research the Selling Agent/Auctioneer Just as it's important to know the property market you're buying into, it's also a good idea to research the agent who'll be conducting the auction. All auctioneers have different techniques, but many have their own particular style or characteristics.
Attend lots of auctions to get an idea of how they work. Observe how auctioneers, buyers and sellers behave on the day.
Observe some of the tricks of the trade in practice. Then observe how the auctioneer who'll be selling the property you're interested in performs. You might get to know when the winning bid is made by the way the auctioneer talks or moves. Auctioneers generally have certain catch phrases or actions they'll use every time they get close to selling a property.
Watch them carefully and you might just get the upper hand!
Advise the Real Estate Agent if you are interested in a property. They will advise you if the Vendor would consider sale prior to Auction, and whether any offers have been received prior to the Auction Day
3.
Have your experts completely check the property and the documentation If you are seriously interested in a property and intend to bid you should have your Solicitor inspect the Contract of Sale.
It is a good idea to have a good read through all the paperwork related to the Auction beforehand. Wherever possible, contact the Agent handling the sale and ask them to provide you with a copy of the documentation. This is normally possible in the week prior to Auction.
Read through all of the documents and always ask if you are unsure of anything. It is important to clarify details such as settlement terms, deposit and fixtures before the auction commences.
Remember, if the auctioneer knocks the property down to you, you've purchased it and will be legally obliged to settle. Many lending institutions will give you written loan approval prior to an auction, allowing you to bid to a certain price.
Get building and pest inspections done before the Auction. It is not possible to make an Auction purchase conditional on inspection results. Make sure that any reports or inspections have been carried out to your satisfaction before you attend the Auction.
4.
Ask for help If you are not comfortable with the stress of bidding at auction, have a friend or a professional assist you. A buyer's agent can be well worth their professional fee when it comes to bidding for you as they won't get carried away and let their heart rule their head.
They could also help you to determine what your bidding limit should be. They attend enough auctions to understand when something needs clarification and are not afraid to ask.
5.
Negotiate before the auction In property transactions everything is negotiable- not that you can always get what you want. The same is true for an auction, even though most people don't realise this and think they're stuck with whatever terms the agent and vendor sets. You may want to alter the terms of settlement, the amount of deposit, or the chattels that are included. But if you want to change any of the conditions in the contract of sale, you must request this before the auction, not after the bidding has finished.
We'll often ask for amended terms just to gauge the level of interest in the property and how much competition we'll have on the day. If we ask for longer settlement or a smaller deposit and the vendor refuses, it could mean that they're confident that there's strong interest in their property and the agents expect multiple bidders on the day. On the other hand, if they accept our requests, it suggests there may not be as much interest as they would like.
6.
Get Pre Approval Ensure that you have your Finance in place prior to the Auction. Establish you bidding limit. Make sure you allow for all extra costs, eg legal, stamp duty, finance fees etc.
7.
Have Fun Preparation and planning will help you enjoy the auction process. If you have completed your research, set your limits it is then only a matter of seeing how the auction unfolds.