There is so much to think about when buying a house at auction - where do you start? To help you, we have put together our top 10 tips. Remember, don't be daunted by the auction process - read as much as you can about the process, talk to your friends and get familiar with how it works. And if you don't end up getting the property, don't fret, there are plenty more out there!
Here are 10 of our best tips to get you started:
Before the auction:
1. Get your finance sorted well in advance of the auction
Know what your bank will lend to you, and know how their process works for property valuations when the sale is by auctions.
2. Get your strata searches and building inspections well before the auction
If the property you are trying to buy is part of a strata Ė you might want to get a strata inspection report. It is also generally advisable to get a building and/or pest inspection done.
3. Establish what you think the property is worth
Use online property listing websites to find similar properties. If you can find comparative properties Ė how much are they on the market for? Call the real estate agents of these comparable properties and ask the agent what they believe the property will really go for Ė donít just take the listed price on the website. You may also want to purchase a professional sales history report to show past sales of your property and of similar properties in the area.
4. Do your maths on the purchase price
Understand what your offer would mean in terms of repayments, stamp duty costs and the deposit you will need. Even if your bank has approved you for a larger amount than your offer price Ė you are the one who is going to have to make the repayment amounts each month, and you donít necessarily have to borrow all that the bank could offer.
5. Get your conveyancer/solicitorís opinion on the sale contract well in advance of the auction
Ask the real estate agent for a copy of the contract and provide it to your conveyancer. Your conveyancer/solicitor will check over the contract and give you the advice you need to make an informed decision about the property and the sale.
6. Go to other auctions to get to know the process
Find other auctions taking place before yours, and see how they work. This will familiarize yourself with the process and ensure there are no surprises on the day.
On the day of your auction:
7. Set your limit
Before the auction, set the limit for how much you are willing to pay for the property. How much do you like the place? Does it meet all of your property criteria or just some? What are the advantages and disadvantages? Have these questions in the back of your mind throughout the process, and donít get carried away at the auction and offer more than you believe the property is worth.
8. Have your deposit ready
Make sure you have readily accessible funds in a bank account and a chequebook ready to draw on them. If you are successful at the auction, you will be required to write a deposit cheque then and there.
9. Let others start the bidding process
When the auction starts, let others commence the bidding and see how things go before you raise your hand. It may become quickly apparent that the price is going to go above your limit. If not, donít wait until itís too late; raise your hand and enter the bidding process.
10. Stay strong!
Be prepared for a few minutes of complete adrenalin rush Ė it can be very exciting. Stay true to what you believe the property is worth, and donít feel pressured or get carried away with the process. Remember that the auctioneers are trained to pull on your heart strings and encourage you to make another offer on the place. No matter what happens, know that there are plenty more properties out there if this sale doesnít work out!
Good luck with the auction, we hope you are successful!
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