Published at: 6/21/2016 3:29:23 PM
It takes a cool head and plenty of planning to be a boss at auction sales. We explain five key steps to nail the action at auctions.
If you’re looking for an action-packed drama filled with heroes, nail-biting moments and adrenaline-charged excitement, skip the latest cinema blockbuster and head to the nearest property auction.
Auctions can offer big pluses – like the chance to secure your dream home at a price that truly reflects market value. But successful buying at auction calls for some additional work behind the scenes, and knowing what you’re up against is a vital step in mastering the auction game.
Step 1 Be clear on how auctions work
Know how auctions work in your state/territory – there can be minor variations in regards to cooling off periods, deposit requirements and what you need to do to register as a bidder. The selling agent can provide details or check out the website of the Office of Fair Trading in your area to get up to speed with the fine print of auction rules.
Step 2 Attend at least one ‘practice’ auction
Aim to attend at least one property auction where you are an impartial observer - it’s a great way to get the hang of how auctions work. It can seem as though there are multiple buyers, vigorously working their phones however the reality is often quite different. Most auctions are dominated by just a handful of bidders especially as the bids climb higher. So don’t let a packed auction room deter you, you could be up against far fewer genuine bidders than there appears to be.
Step 3 Have conditional loan approval in place
Confidence is everything at auction, and the biggest confidence booster available is having certainty about your borrowing capacity. ME provides conditional loan approval, meaning you can head to the auction knowing exactly what you can afford as your highest bid. Speaking to ME before you head off to the auction lets you bid with confidence, free from concerns about being knocked back for loan finance if you are the winning bidder on the day.
Step 4 Bypass the lemons
Be sure to organise a pre-purchase pest and building inspection for any property you’re thinking of bidding on. Yes, it’s an extra expense but it can be money well spent if it turns out the home has a pest problem or structural issues like dodgy wiring. Being the winning bidder on a lemon property is no win at all.
Also arrange for your solicitor or conveyancer to check the sale contract too so that you know exactly what you’re buying into – warts and all.
Step 5 Stay frosty
Auction sales can be over in a matter of minutes, and along with the theatrics of a fast-talking auctioneer, interested buyers can feel intense pressure to raise their bid. Moreover, the action occurs in the very public forum of the selling agent’s rooms or the front yard of the home being sold.
Handling the pressure of an auction calls for a cool head. Do not allow your emotions to take over – be prepared to walk away if bidding goes beyond your purchase budget. If you don’t trust yourself to remain disciplined, consider using a buyer’s agent to bid on your behalf.