We love a good auction, especially when our clients secure a property at a good price!
Auctions can be stressful though, especially if this is your first purchase or you’re a ‘first time bidder.’
Not only can we turn up on Auction Day to hold your hand (ok, maybe not actually hold your hand because that would be weird), we can help to ensure you’re as ready as possible for the big day.
Your Pre-Auction Checklist:
Do your research. Know the area and know the comparable sales. You want to have an idea of what the property is worth, so you can determine how much you are prepared to pay for it.
Arrange a pre-approval. This will provide a limit as to how high you can go and give you the confidence to bid on the day.
Inspect the property a couple of times so you are sure it’s one you want to bid on.
Read the building and pest inspection report. In the ACT, it’s mandatory for the seller to provide you with a copy of an independent building and inspection report. Take the time to read it as it may alert you to potential issues with the property.
Attend lots of auctions. Make sure you understand what the rules and regulations are in the state you are purchasing – you want to be comfortable with the proceedings on the day. It’s also good to get an understanding of the emotion and excitement involved, as this is only likely to be heightened when you’re the one bidding.
Seek legal advice. If you win the auction, you will need to sign the contract and pay the deposit on auction day. This means if there is anything you want to negotiate in terms of clauses (paying 5% instead of a 10% deposit or extending the settlement period, for example) you need to have these negotiations before the big day. Your should also ask your conveyancer to review the contract before auction day. This way, if you do end up with the winning bid, you can be certain you’re not entering into a legally binding agreement that puts you at risk.
Set yourself a limit. This limit will be based on three things:
1) your estimated value of the property
2) how much you want the property (are you prepared to pay a premium)
3) how much a lender will allow you to borrow (i.e. your pre-approved loan amount)
Get your deposit ready – If you’re successful, you will need to pay your deposit straight after the auction so you need to have your deposit ready.
Letter of Authority – If you’re not confident to do the bidding yourself, you can appoint someone to bid on your behalf. Talk to the agent if this is something you want to do, as you will need to arrange this beforehand.
Your Auction-Day Checklist:
Arrive early to have a final look around the property.
Register as a bidder.
Remind yourself of the limit you have set and don’t get carried away by the atmosphere. Don’t be swayed by the agents quietly talking in your ear, encouraging you to bid higher. If you have reached your limit, stay there. There WILL be another property.
Bring along some support, but only if it’s going to help you! Having family or friends there with you can be helpful, but it can also increase your nerves and add unnecessary pressure.
Bid with confidence, knowing you’ve done all you can to be as ready as possible. Some bidders like to sit back and take it all in and then jump in at the last minute. Other bidders like to be part of the action right from the start. Auctions can be won either way, so make sure you do what feels right for you.
Don’t be discouraged if the auction ends and you’re not the highest bidder. It’s not uncommon to walk away empty-handed from a few auctions, before you secure the right property at the right price.
Good luck!
When you are successful on auction day, make sure you share your good news with us – first thing! We’ll progress your pre-approval to a full-approval and get things moving towards settlement.
(If it all seems too hard, you might want to consider getting a buyers agent to help you. We can put you in touch with the right people if this is something you’re interested in.)
