Auctions can be both electrifying and daunting, especially if you’ve found your dream home and you’re desperate to be the winning bidder. Knowing the facts about how auctions work can help you to keep a level head under the auctioneer’s heated stare so you can achieve the result you want.
Below we give you an insight into the general flow most successful bidders have followed prior to winning their properties. Reading through this article and then conducting your own research is essential. Every state and territory have different rules when it comes to auctions, so it pays to check in with your local government or a local conveyancer or solicitor to see what rules you need to adhere to if you’re considering buying at auction.
1. Research
Go to as many auctions as you can, for lots of different styles and types of properties to see what can happen. Some move very quickly; others quite erratically. Some properties are ‘passed in’ (meaning the reserve price has not been met, so the property has not sold at auction) while others are sold in minutes.
Observing how auctions progress and getting over any auction-day-nerves will stand you in good stead when it’s your turn. If you think you’ll get caught up in the auction whirlwind, consider engaging a Buyers’ Agent to bid on your behalf.
2. Inspect
Once you’ve found your dream property, make sure you organise any pest and building inspections prior to the auction. Auction sales are final and there is no cooling off period, so if you’re the highest bidder the property is yours. That’s why knowing the exact condition of the property prior to bidding at the auction is so important!
Asking your solicitor to inspect the sale contract prior to the auction is also a smart move. That way you’ll have time to digest the conditions of the sale prior to even thinking about bidding.
3. Pre-approve
Having confidence in how much you can afford (and therefore, bid up to) is a must for any auction sale. Don’t bid until you have a pre-approval from your financial institution and have certainty your finance is approved. Knowing how much finance you have will also set the upper limit for what you can bid – and never go above it, no matter how much you love the place. To find out an estimate of how much you can afford, why not try our Borrowing Power Calculator?
4. Register
Depending on which state or territory you live in, you may need to register to bid on auction day. Auctions are notoriously nerve-wracking. To keep a clear head, engage a Buyers’ Agent to bid on your behalf or bring along a friend. Someone who knows your maximum limit and will calmly bid for you while you’re nervously waiting on the other end of the phone.
5. Celebrate
If you’re the highest bidder, it’s time to crack open the champagne (and your cheque book!) The property is officially yours, pending successful exchange of contracts, settlement and payments of course.
To kick off that process, you’ll need to pay 5-10% of the sale price right there and then which is why having pre-approved finance and a strong deposit is so important.
If you’re in the market for a home loan, get in touch with us today on 1300 747 747.
The information on this page is of a general nature and is not intended to be a substitute for personal advice. This information has been produced without taking into account your personal financial circumstances, objectives or needs. You should consider the appropriateness of the information to your financial situation and seek personal advice before acting on any of this information. Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557 AFSL/Australian Credit Licence 238 305.
Published February 2018
