Buying Real Estate Part 8 - Auction Day Tips and Tricks
If you haven't purchased a home by auction before, it's perfectly natural to have a few jitters about the process.
Buying property for sale by auction is exhilarating, competitive and a little bit stressful all at the same time. However, the satisfaction of securing your dream home with a winning bid is second to none.
There are a few things you'll need to organise before auction day to ensure everything runs smoothly.
Have the property valued so you have an idea of what it is worth. This figure will also help you set a bidding limit for how much you're willing to pay for the home. Keep this figure in mind and stick to it on auction day.
If there are any terms or special conditions you would like to include in the contract of sale for the home, now is the time to discuss these with the seller and the agent.
This is because the sale is unconditional as soon as the contract of sale is signed.
Obtain a copy of the contract and review it with your solicitor. This will give you an understanding of your legal obligations during the sale. Some inclusions may be settlement date, deposit and chattels.
Once you have approved this, you can review your finances to get everything in order. You'll need to pay the deposit for the home once you sign the agreement, so ensure you have the funds available. You also need to know that there is no cooling off period when you buy at auction - so you can't change your mind if you are the succesful bidder on the day.
The Rules of Auction
Once the auction begins, there are many rules in place that you will have to be wary of, lest you find yourself bound to a deal you aren’t happy with. The auctioneer will outline all rules before the bidding begins.
This can include their obligation to refuse bids after the hammer falls, to arbitrate bid disputes, and also to refuse bids that come from those who have not registered for the auction.
There may be more specifics depending on where the auction takes place, so check the rulings and listen carefully to the auctioneer.
It is in their best interests to ensure the auction runs smoothly too, as they can be fined up to $11,000 for accepting bids from unregistered buyers in NSW. In Queensland, a similar fine can be handed out for not showing the auctioneer’s name or license.
What Type of Bidder Are You?
When the bidding gets underway, you’ll find some strong auction stereotypes emerge. These are common at many auctions, and can be easily handled if you know what to expect - and you may even recognise yourself in some of these.
The high roller
These bidders tend to raise the bar early, as an intimidating factor. However, they can sell themselves short and end up paying more than they need to, or exhaust themselves early by flying too close to the sun and hitting the upper levels of their budget too soon.
This is a ‘slow and steady’ bidder, who is unlikely to even be heard from until the closing stages. The drawback here is they enter the bidding when the level is already quite high, so may be stretching their budget with the first bid they make.
These bidders are common, but frustrating. By laying random bids all through the auction, the newbie can be a confusing bidder that does not often succeed.
When at auction, you need to have a handle on your finances, keep a cool head and adopt traits of both the waiter and the high roller to have a good chance of victory. Luck needs to be on your side a little as well!
If you want more detailed information about Buying at Auction download our eBook here