Buying a Property at Auction
An auction can be tricky to navigate and that is why pre-planning is essential. We've put together a list of important information to help you through the Auction process.
What is an Auction?
An auction is where potential buyers gather to publicly bid for a property.
Most sellers will have set a reserve price. In the instance where no bids are made at or over this reserve price, the property may be passed in. In this event, you may have an opportunity to negotiate a sale with the seller.
Unlike private treaty sales, properties sold by auction have no cooling-off period, and you cannot negotiate the conditions of sale. That means you need to complete any due diligence inspections prior to auction day and have your deposit cheque ready at the time of sale. Always check the contract of sale before you bid to ensure that you have the necessary funds to secure a property before you bid.
Can you make an offer pre-auction?
Whether you can make a pre-auction bid is largely determined by the market that you are buying in. In a competitive sellers' market, sellers may be less willing to accept pre-auction offers. However, it may still be worthwhile offering a fair price, as the seller may be wanting to sell quickly.
Keep in mind though, that you may trigger more competition among buyers prior to the auction and depending on the state in which the property is located, a preauction offer may be bound by the same conditions as if the property was sold at auction, such no cooling off period.
How can you prepare for auction day?
- Do your research; Understanding the local property market, including what comparable properties have sold for, will assist you to evaluate the property's value and also what the buyer demand is expected to be.
- Complete your due diligence: From having your solicitor or conveyancer review the contract to completing your building and pest inspection report, completing your due diligence is vital as there is no cooling off period.
- Use a Buyer's agent; if you are not comfortable with the process engage a buyer's agent to bid on your behalf. Alternatively, you could ask a friend who has auction experience.
- Set your budget; Set the absolute maximum budget that you are comfortable with and make sure you stick to it on the day.
- Obtain Pre-approval; If you are the successful bidder you will need to pay.
- Go to other Auctions; Visit other auctions to experience firsthand the auction day environment and process. It is also a great way for you to get an idea of what type of bidding style suits you best.
Are there techniques to assist in bidding successfully?
- When it comes to bidding at an auction, there are many different techniques. Below are some of our tips to help you bid successfully.
- Make strong, confident bids; From the way you stand to the tone of your voice, make sure your bids are strong and confident.
- Call out the full amount of your bid; When the bids start to reach smaller increments, say the full amount of your bid as it will remind other bidders of exactly where the auction is at and may alert them that they are near or over their budget.
- Keep your cool; When the bidding comes close to your limit whilst it is natural to be anxious, keep a confident stance and avoid talking nervously with your partner as it will indicate to other bidders that the price is nearing your maximum budget.
- Be prepared to walk away; Confidently bid until you have reached your maximum budget and then walk away if it goes beyond this, knowing that it just was not the property for you.