Auctions can be an exciting and competitive way to purchase a property. However, the auction process can also be intimidating and stressful for unprepared people. To increase your chances of success, it is essential to approach property auctions with a solid plan and a clear understanding of the bidding process. To help ease the stress, here are six quick tips you should consider before bidding on a property you love.
Before attending an auction, research the property and the local market thoroughly. Visit open houses, review recent sales data, and gather information about the neighbourhood, schools, and amenities. Knowing the market will help you determine the property’s true value and avoid overpaying during the auction.
Secure pre-approval for a mortgage before attending an auction. This will give you a clear understanding of your budget and demonstrate to the seller that you are a serious and qualified buyer. Remember that auction sales typically require a deposit upon winning the bid, so be prepared to provide the necessary funds.
Determine your maximum bid before attending the auction and commit to staying within your budget. Auctions can be emotional and competitive, and it’s easy to get caught up in the heat of the moment. Setting and sticking to a budget will help you avoid overpaying for a property and making financial decisions you may regret later.
Familiarise yourself with the auction process by attending several auctions before bidding. This will help you understand the pacing, bidding strategies, and auctioneer’s style, allowing you to feel more comfortable and confident when it’s time to participate.
Develop a bidding strategy in advance, considering factors such as your budget, the property’s value, and the competition. Decide whether you want to start with a strong opening bid to assert your interest or wait and observe the other bidders before jumping in. Be prepared to adapt your strategy based on the auction’s dynamics.
During the auction, it’s crucial to remain calm and composed. Avoid showing any signs of excitement, anxiety, or frustration, as this may reveal your intentions to other bidders and encourage them to bid against you. Maintain a poker face, and don’t let your emotions dictate your bidding decisions.
Familiarize yourself with the auction rules and regulations, which can vary between auction houses and jurisdictions. Know your rights and responsibilities as a bidder, and ensure you’re prepared to follow the required procedures upon winning a bid. If you need to change the settlement date, let the Real Estate Agent know well in advance. This is often possible but needs to be signed off by the Vendors.
Much like the settlement date, if you don’t have the required deposit – usually 10% of the purchase price – let the Agent know well in advance (at least 3 days). This will need to be approved by the Vendors.
If you have any questions beforehand, don’t hesitate to talk to the Agents at the auction. They want bidders so they will be happy to help you through the process.
Remember that when the hammer falls, and you are the last bidder, you have unconditionally bought a house (assuming the bidding has met Reserve). The bank must sign off the property before the auction. This means sending us a copy of the auction documents 3 working days before the auctions. The bank will have questions about any disclosures or unusual clauses in the auction documents.
In some cases, the property may not meet the reserve price set by the seller, and the auctioneer will pass the property in. If you are the highest bidder, you may have the opportunity to negotiate with the seller privately. Be prepared to engage in post-auction negotiations and clearly understand your maximum price and terms.
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