Property auctions can be a good way to buy your next home or investment property, provided you know what you’re doing. Unlike a private sale where buyers can add conditions to a contract – like a finance or building inspection condition – when it comes to buying property at auctions, buyers have to do their due diligence before they even bid. If you are planning to bid at an auction, it’s important you’re prepared. Check out these 5 tips to get auction ready.
1. Do your homework
To get a clearer picture of how much a property is likely to sell for, research similar properties in the area and compare the selling price of those that have recently sold. Also think about the current market conditions – housing demand, how long the property has been on the market – and things like its proximity to schools, the CBD, public transport, as well as size and layout of the property. All of these factors should give you a much clearer idea of how much the property is likely to sell for at auction.
2. Know what to expect
There’s no doubt that bidding at auction takes a bit of skill. So that you know what you’re doing on the day – and you know what to expect at an auction – it’s a good idea to attend a few auctions before you intend to bid. That way you’ll be familiar with the terms that auctioneers use, the style of different auctions, and how to bid. Pay careful attention to those who are bidding, the language they use and the strategies they utilize. By the time you’re ready to bid, you’ll feel a lot more confident.
3. Get your finances in order
Property auctions are unconditional which means you must have pre-approved finance in place ahead of the auction and you should already have completed your due diligence on the property you’re bidding for. If you are successful and your bid wins the auction, you’ll be required to pay a 10 per cent deposit on the day. Having pre-approved finance means you know how much you can bid up to and what your absolute bidding limit should be. It’s a good idea to set your bidding limit ahead of the auction – and then stick to it! - as it’s easy to let your emotion rule your head in the heat of the moment!
4. Pre-register and read the terms and conditions
To bid on a property at auction, you’ll need to register with the real estate agent and be assigned a bidder number. When registering, you’ll be required to provide some form of ID like a drivers licence or passport. In addition, check with the agent about payment of the deposit – how this is to be made and how much. Be sure to read and understand the terms and conditions of the auction, and have your solicitor go over the paperwork and ask questions if you’re unsure.
5. Bid confidently
It’s natural to feel nervous if you’re bidding at an auction for the first time – and even if you’ve bid at auctions in the past. But do your best not to let your nerves take over or to let your nerves show in your body language. Position yourself near the front of the auction room if possible, with a good view of the auctioneer and other bidders. Use a strong, assertive voice to confidently call out your bid, and pay attention to those bidders around you. You may be able to pick up signals if they’re near to their bidding limit, so that you push ahead to win.
When you’re ready…
Buying at auction can be exciting, but it can also feel intimidating. Set yourself up for success at auction by knowing how much you can afford and how high you can bid. Contact a Mortgage Express mortgage adviser today to talk about pre-approved finance and get ready to bid at auction.
For more tips on buying and selling at auction, take a look at this insightful article from Harcourts Real Estate NZ.