Australians have a real passion for property, and attending weekend auctions has become something of a national pastime. It’s one thing to take part as a spectator, but what happens when it comes time to actually make a bid? Being prepared is key to your success.
The benefits of buying at auction
While auctions can make some people anxious, there are a number of well-established benefits for buyers at auction, including:
● Transparency. An auction is a great way to gauge the value of a property because it’s clear what interested parties are willing to pay. On the day, all prior discussions and negotiations take a back seat to actual bids.
● Speed and efficiency. When the auctioneer announces that a property is on the market (and you’ve made the highest bid), you can rest easy knowing the property is yours. In contrast, private treaty sales can be subject to complicated and lengthy negotiations with a less certain outcome.
A little planning goes a long way toward making auction day a success. Here are our five top tips for securing your dream home or investment property at auction:
Get to know the local market
Getting an accurate sense of the market is a key strategy to succeeding at auction. Here’s how to do it:
● Attend as many open houses and auctions as you can to get a feel for properties in your target areas and the auction strategies and habits of bidders that attend.
● Set alerts on property and agency portals to get immediate notification of listings.
● Keep an eye on real estate news and agency sites to get the low down on property sales and auction results.
● Build a relationship with a knowledgeable local agent, so you’re at the top of their mind when a suitable listing comes up.
If you have your eye on a particular property and want an appraisal from an independent values, be sure to choose one who understands the local market.
Find out as much as possible about the property
Next, do your research on the value of the property you’re interested in. This involves getting to know recent sale results for properties that are similar in location, size and features.
What are the pros and cons of the property itself? When it comes to potential buyers, what are the features either boosting or detracting from its appeal? These are the factors that will affect both the level of competition at auction and the likely sale price.
Do your due diligence and prepare your finances
Consult with a bank or mortgage broker who will check your finances and determine your borrowing capacity. Knowing that you’re able to meet the necessary repayments on a mortgage will allow you to get your loan pre-approval in place and go to auction with confidence.
Also, be sure to do your research and check the necessary building inspections, pest inspections and title searches so you won’t be caught by any nasty surprises.
Come up with a budget and stick to it
Whatever strategy you use at auction – bidding early or late, in small or larger increments or using a buyer’s agent or trusted friend to bid for you – it’s important to keep as close to your predetermined budget as possible. As much as you love a property and dream about it being yours, letting emotion take over could result in you committing to a higher price than you can afford.
At the same time, try not to be too discouraged if you go slightly over budget. The value of property appreciates over time, and if you hold it long enough, it doesn't matter if you pay a little more in the short term.
By keeping these tips in mind you’ll be on your way to buying the perfect property at the right price on auction day.
Get to know your local agent
It’s a great idea to develop a relationship with the real estate agent and communicate as openly as possible.
Showing that you’re serious about buying will not only propel you to the top of an agent’s list for early notification of suitable properties, it will also put you in pole position in the period leading up to the auction, and on auction day itself.
A good agent can also give you the professional backup you need to handle yourself effectively in the bidding process.
Ready to improve your auction game? Barry Plant has plenty of tips to get you started and build the skills you need to bid confidently.