Many buyers are unnecessarily frightened of auctions. The drama of the deadline, the patter of the auctioneer and the crowds competing to bid can be intimidating to newcomers. But if the property you love is for sale by auction, it pays to be prepared. Here are some tips to help:
•Attend as many open for inspections as you can before the auction
This will ensure you really know the property and give you an understanding of the level of interest in it and the competition you’re likely to face on auction day. It also pays to attend a few auctions of properties you’re not so interested in, to get into training for the day.
•Get copies of contracts before auction day
Ask your conveyancer or lawyer to go through these so you can ask questions of the agent before you bid. This is also a good time to check out auction rules in our state about what you can and cannot do.
•Have the property properly inspected
Auctions are sold on a ‘buyer beware’ basis under the hammer, so it pays to have done your due diligence before bidding. Have a building and pest inspection conducted on the property and factor any issues into your bidding strategy.
•Set your budget
Look at what similar properties nearby have sold for and/or or seek out a property value report to give you an idea of what properties like the one you want to bid on are selling. This will give you an idea of whether it is in your budget. But remember, these are guides only. If the bidding is strong, prices can go much higher and it will be up to you to decide if you’re comfortable with where the final price lands.
•Set your bidding strategy
Make sure you know exactly how much you can borrow and how much you are prepared to spend on the day. Set a budget and stick to it. Perhaps even bring an impartial friend or family member along who can bid on your behalf, or consider bidding by phone. It often pays to have a heart to heart with your partner well before the auction to ensure there are no incriminations if the price goes well over your budget and you miss out.
It helps to stay in control when you’re bidding. Try to keep bids increasing in low increments but if the auctioneer refuses to accept your bid, you’ll need to accept that and change your tact. You’ll see agents running between bidders encouraging you to raise your bid. Be ready and polite.
•The auction can be just the start
Quite often, the auction is just the beginning of the sale process, especially in a quieter market. If the property passes in but you are the top bidder, you will be invited back by the agent to negotiate a sale. If the negotiation fails with the top bidder, your offer may be next in line.