Buying at Auction - Extra tips for First Time
Buying real estate at an auction is an exciting and fast-paced experience. If you’ve never been to a real estate auction before, make sure you attend a few to get a good feel for the process.
Before auction day
- Be sure that your finances are all sorted and your deposit is ready to go. If your bid is successful, you will be required to pay the deposit on the day. This is usually 10% but it can vary, so make sure you know the percentage before auction day.
- Conduct all necessary inspections on the home before auction day so you can ensure the building is sound. It is recommended you have a building and pest inspection on all properties you are serious about buying as it may save you thousands in the long run.
- Decide on a strict price limit so you don’t end up overspending.
On auction day
- Register as a bidder, giving your name, address and telephone number. You will be required to show proof of ID such as a drivers licence or passport. Each state and territory has different regulations so find out what happens in your area before auction day
- You will receive a bidding number that you need to display when making an offer.
- Only registered bidders or their representatives will have the opportunity to buy at auction.
- The auctioneer will present the property for sale then invite bids from the audience
- If you can, make bids in larger increments to knock out those who cannot afford to pay more.
- Steady firm and unemotional bidding is often the best tactic, set your limits and most importantly stick to it.
- If you are the highest bidder, you must be ready to pay the deposit as you are legally bound to buy the property, you have no cooling off period
- If you default you risk losing the deposit which is a substantial amount money.
If the reserve price is not reached, there is still an advantage in being the highest bidder, as you will then have first right of negotiation with the vendor.
Note: legistration in all states and territories in relation to bidding at auction differs, so make sure you find out what they are in your state or territory.
Tips for buying at auction
- Set your price range so your heart won’t rule your head at bidding time.
- Take some support with you to the auction, preferably someone with a strong head to stop you bidding beyond your range.
- Don’t bid for any property unless you have obtained and accepted all legal, pest and building inspection reports.
- Don’t be afraid to bid aggressively for the property, you want to eliminate other potential buyers.
- Expect the unexpected, prices at auction can shoot up very quickly. Auctions are usually met with fierce competition from buyers, so it’s best to stay as calm and level-headed as you can.
To find out more about buying at auction in your state or territory click here