Buying at Auction
Auctions can be a challenge for both the buyer and the seller due to the face that either party could be forced into making a speedy decision that could cost them thousands of dollars.
This is particularly true for buyers as there is little room for error. Not only is there no cooling off or finance clause period when winning at auction, once you make the winning bid you are legally bound to sign contracts and pay the deposit.
Preparation is key when going to an auction, here are a few tips that might help you at the next auction:
Before the auction
- Learn how the process works—go to as many auctions as you can.
- Go to some open houses of the trial auctions you plan to attend—get a feel for the difference between what an agent quotes as the expected price and the actual selling price.
- When you find a place you like, get a contract from the agent—have your legal rep check it and read it yourself.
- Get building and pest inspections done.
- Arrange finance—get pre-approval on your loan.
- Decide the maximum amount you will pay for the property.
At the auction
In most cases you’ll need to register to bid when you arrive at the auction room (or location), you’ll need to take your identification as well as your cheque book.
During the auction
Hold your horses, when the auction starts wait and watch the other bidders. Wait till the property is ‘on the market’ before making a bid. Essentially once the property is ‘on the market’ the property has reached the reserve price which means the seller is prepared to sell at the current bid. This means the property will be sold!
Bid firmly. You know your budget, be confident with each bid you make and be sure to stick within your limit. Be aware that you don’t have to agree with the auctioneer’s suggested bid, if the auctioneer asks for $10,000 increase you can offer $2,000 if you prefer.
Stick to your budget and if required take a hard headed friend for back up.
After the auction
If you made the highest bid after the property was declared “on the market”, congratulations, you’ve bought yourself a property. The agent will take you somewhere quiet to finalise the paperwork. You’ll have to hand over the deposit at this point.
If the property did not reach the reserve price and is “passed in” you can negotiate. If you’re the highest bidder you have the first right of refusal of the vendor’s reserve price. If you’re not the highest bidder, talk to the agent and make your interest known.
To find out how Hunter Galloway can help you call Nathan Vecchio on 0410 000 689.