Buying a house is not an easy decision. There are different ways to buy a house such as at an auction, going to open houses through online research, or seeking the help of a real estate agent.
Are you Buying at an Auction? – Tips to Follow
However, when you are buying at an auction, there are certain things you should consider. Given below are a few things you have to keep in mind when buying a house at an auction
- If you are not purchasing a property in your own name, make sure you prepare and organise the purchasing entity – such as a self-managed super fund (SMSF), trust, etc.
- Be aware of how much you will be spending on the purchase. Apply for a loan and get a preapproval for the finance required before. This will allow you to be well prepared when buying at an auction.
- To get a better idea of how the entire transaction takes place, attend as many auctions as you can. This will enable you to observe different strategies used for bidding and get a good idea of the overall environment.
- Carry out thorough research. Visit different properties and inspect them thoroughly. This will enable you to understand the dynamics behind every sale. It gives you a better understanding of the overall market and puts you in a better position to bargain the price you have in mind based on your knowledge and experience.
Read More: Follow your Buying at Auction Checklist
- When buying at an auction, it’s very important to play your cards right. Real estate agents are very smart in getting the information out of you, including the price you are willing to pay. If you are not careful, you might end up revealing information that may affect your bargaining power.
- Get legal services and hire a solicitor. Show him or her your agreement and seek advice. Make changes in the contract as suggested.
- Go to the auction as early as possible and do a little survey of the playing field. Observe who else is there for bidding. Not everyone in an auction is a bidder; you will also find the onlookers who attend the auctions for other reasons. The serious bidders will always be inspecting the agreement and saying all the right things, which will make it easier for you to differentiate between the two.
- You have to play smart. In today’s auction environment, you have to use psychological tactics. Give the impression of being a confident bidder. However, make sure you don’t overdo and stop where you have to.
Read More: Know your competition at auction
Come up with the Strategy
- Always start with the highest price and close as close to the reserve as possible – a price below which the property is not sold. Be firm in your bidding and show assertive attitude; showing laziness gives a sign of weakness.
- Whenever you call out your bid, mention the full price. For instance, instead of calling out the increment of $8,000, simply say $68,000.
Read More: 11 Rules for Buying at Auction
Prepare Yourself to Miss Out
- Just because you are at an auction, doesn’t mean you have to place the highest bid. Prepare yourself to miss out and do it strategically. Set a walk-away price and stick to it. Buying at an auction requires a little homework; don’t jump into the market until you are ready. Going to different auctions will help you understand the market dynamics. You will learn how prices are determined and which property is worth the price you have in mind. Once you are ready to buy a property and well-prepared to play your cards right, you won’t get disappointed even if you do lose. This is because you know the right price of the property and are ready to win your battle the next time
- Due to the lack of experience in buying at an auction, many people hire the services of an experienced agent who do the bidding on your behalf. You can also do the same and hire them. They have years of experience in the market and know how level the playing field and secure the best bid price.
Read More: Be prepared to walk away