Auctioning of properties can be a daunting process for both buyer and seller, but it doesn’t have to be.
Preparation is key
Preparation is key, as this will have you well-positioned to make the most of the opportunity to achieve your real estate dream.
To help you understand what we mean by being prepared, here are some tips to point you in the right direction.
Pre-auction, and on the day.
Do your research
One of the best ways to prepare yourself for an auction is to attend other auctions in the area you’re looking to buy.
This will help you to understand the process, how hot the demand is for the area, and will help you devise your bidding strategy.
Get your finances in order and know your limits
It is important to know what your limits are before auction day. Once you’re in the throes of the auction, it can be easy to get emotionally influenced by the desire to “win” the property and get carried away, possibly spending more than you want and can afford to.
You also need to be able to provide a deposit of up to 10% of the property value on the fall of the hammer.
Speak to the agent
Contact the agent to let them know who you are and that you are interested in bidding on the property.
They will then know to keep you informed of any pre-offers or essential information to be aware of, and it also provides the opportunity to discuss any changes to standard terms and conditions you’d like, and for them to take those to the vendor.
On the Day
All bidders must be registered
You can either do this on the day of the auction or with the agent before the day. Being organised will make the process that little bit less stressful on the day.
Or you can also have someone else act as a proxy for you if you can’t be there, but again you must inform the agent, as they will need the person bidding on your behalf to sign a proxy form.
Have your bidding strategy worked out and know your limit
Once the auction begins, it is important to know how you plan to bid. Do you wait? Do you put in a low-ball offer and then sit back? Do you go straight to what you think will be a high offer and hope to scare off other bidders?
There is no one right way to approach this situation. Each auction is different, and everyone has a different approach. Try and get a feel for the demand on the property and the mood of the bidders as you go, and revise your strategy as needed.
Every auction must have a reserve price set before the auction commencing. This is the minimum sale price the vendor will accept from a buyer.
As a buyer, you won’t know what the reserve price is, but you may be told by the auctioneer during the auction once it has been exceeded that the property is going to be sold.
If the auction doesn’t reach the reserve price, the property will be “passed in”, but the highest bidder may be invited to negotiate directly with the owners.
Buying property at auction is an exciting process for both buyer and seller. The best advice we can give is to be prepared, know your limits, and have a strategy in place to get you into your dream property.