Buying at auction: some tips for successful bidding
Sep 20, 2016
Buying a property at auction can be intimidating. The process isn’t the same as making a private offer, so it’s worth brushing up on the auction process before you head out to bid. Here are Choice Home Loans’ five tips to consider when purchasing a house at an auction.
Buying a property at auction is slightly different to buying a home through a regular sale, so it’s important to do your research and come as prepared as possible to ensure you do not get in over your head.
1. Be confident bidding
Making a bid on a house at auction, especially the opening bid, can be a daunting task. An easy way to build up your confidence is to attend a few auctions where you don’t intend to bid or buy. This will help you get a better understanding of how auctions are run.
2. Know your budget
Due to the nature of buying a property at auction in Australia, once you make a bid it’s unlikely that you’ll be able to withdraw it. You’ll want to know exactly what your limits are before you start bidding. A good way to do this is to speak with a Choice Home Loans mortgage broker about securing a pre-approved loan prior to auction day.
Auctions can generate momentum quickly, so it’s vital not to let emotion sweep you (and your budget) away.
3. On the day of the auction
Depending on which state you’re in, you may need to register with the agent before participating in the auction. If your bid is successful, it is likely that you will be required to put down an on-the-spot deposit of at least 10% of the purchase price. By making a bid at the auction you are accepting the terms of the contract, so make sure you understand the deposit and settlement terms.
Prior to the auction you can ask to see the contract. Make sure you leave enough time to consult your Choice Home Loans broker or a property lawyer if anything seems out of the ordinary.
4. No cooling-off period
There is no cooling off period when purchasing a property at auction. Unlike a private sale, this means there is no opportunity to change your mind about the purchase. While this might seem a little daunting at first, if you’ve done your research prior to the auction you should have nothing to worry about. For peace of mind, try to gather information about recent sales prices for similar properties in the area, and strongly consider arranging a property inspection before the auction.
With all of this out of the way, you’re free to bid with confidence.
5. Don’t go alone
Take someone with you to the auction. Whether it’s a friend or relative, it’s comforting to have a neutral party with you to help you stick within your budget and provide support. It can be easy to lose sight of how much money you’re spending when you’re at risk of losing your dream home. Having someone to help you stay level headed can prevent overspending if the auction heats up.
If you’re thinking of buying a property at auction it’s a good idea to speak with a Choice Home Loans mortgage broker first to understand your borrowing power and to obtain pre-approval ahead of the auction.
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