Auctions are interesting events! The emotions in the room (or online these days) include suspense, excitement, anxiety, and eventually…. joy or sadness, depending where you are when the music stops.
Many people love Auctions, especially Real Estate Agents. Some sellers also like them as it brings on an outcome at a set date; their property is either sold or passed in and they can then take the next step in their life.
When the market is hot, Auctions can be a great way to sell a property…. this can also drive highly motivated buyers to try and secure properties pre-auction and minimise the risk of losing them to a higher bidder.
Another great benefit is that Auctions are also very transparent, in that the highest bidder wins.
All that said, for buyers and especially inexperienced buyers, Auctions can be very daunting and stressful. Below are some key tips, and links to online resources, for Auctions.
Before the Auction
You have to be very organised before an Auction. The phrase “due diligence” is often used here.
If you win the Auction, you must sign the Contract and pay the Deposit immediately. And there is also NO cooling off period with an Auction.
Some of your pre-auction checks and steps should include:
- Ensuring your finances are in order – you have pre-approval for finance and have the 10% deposit available.
- Inspect the Property, multiple times even to make sure you are 100% comfortable what you are buying. Also attending multiple times helps you to assess your competition – if the same parties inspect multiple times it shows they are keen. Also listen in to the questions the competition asks the Agent.
- Get a Pest and Building Report done and read carefully (you could also use the Report provided by the Agent).
- Have your solicitor/conveyancer review the Contract – this will cost you money but is essential! You should only do this, however, if you are VERY serious about the property.
- Understand the value of the property to you – Have a firm figure for what you believe the property is worth and also what the maximum is you will go to – to do this you should look at recent comparable sales and market movements/trends. Many people also engage a Buyer’s Agent and/or a Valuer to assist. The property value to buyers can differ greatly…
- Owner/occupiers – if the property is your dream home you may be prepared to pay a lot more than it is worth, and get very emotional on auction day!
- Investors – investors generally want to get properties under market value to maximise future returns. Investors should have a very firm idea on their maximum budget for the property, and stick to this.
- Developers – developers will generally pay more if the property represents a strategic opportunity for them into the future. But they also tend to try and secure the property pre-auction (because they can :)).
On Auction day there are various strategies and tips to give you the best possible chance of winning on the day. Yes, it comes down to who has the deepest pockets, but some other factors can help. Here are some of my favourite tips:
- Get to the Auction early, ensure you are relaxed and keep an eye out for your competition.
- Stand on the side of the auction room where you can see everyone who may be bidding.
- Talk loudly and confidently when bidding – project confidence that you are their to win.
- State your bid in full numbers, like nine hundred and seventy thousand!
- Stick to your game plan – don’t go over what you planned as your maximum.
- And remember, if you miss out, it is only a property!
Using a Buyer’s Agent
Buyer’s Agents can help inexperienced buyers, time-poor investors, or buyers who do not reside in the same location as the property, bid at an Auction. Niva Property can help you with this and also conduct all required due diligence prior to the big day; and some times we may even recommend you don’t go to Auction and move on to look for another property. Get in touch now for a free consultation.
Auctions are just one of the areas in which a Buyer’s Agent can help you…. click here to read more about the many more ways we can help you.