If you’re looking for an action-packed event with caped heroes, edge-of-your-seat drama and thing going under Thor’s hammer, skip the cinema and head to the nearest property auction instead.
Buying at an auction can come with big pluses, like the chance to secure your dream home at its true market value. But it’s not always easy. The big day can be fraught with stress, tension and runaway emotions. Successful bidding calls for some additional work behind the scenes, which means knowing what you’re up against.
1. Be clear about how auctions work.
This sounds obvious, but it’s worth knowing the nuts and bolts before you head out. Do you know what happens before and after an auction sale? Have you eyeballed a Section 32 and contract of sale?
Each state and territory has a slightly different set of rules. There can be minor variations with regards to cooling-off periods, deposit requirements and what you need to do to register as a bidder. Ask the selling agent for details or check out the website of the Office of Fair Trading in your area to get up to speed with the fine print.
2. Attend at least one ‘practice’ auction.
Maybe it’s just us, but an auction can actually be a fun day out. They’re exciting, fast-paced and someone’s dream comes true at the end. Make a list of auctions in your local area and spend a Saturday seeing the action up close.
Being an impartial observer is a great way to get the hang of how they work. Attending more than one means you’ll see the full gamut of scenarios, from multiple serious bidders to a spectator-only event where the property is passed in. Most auctions are dominated by just a handful of bidders, especially as the bids climb higher. Seeing it play out can help you realise that a packed auction doesn’t necessarily mean you’re in over your head.
3. Have conditional loan approval in place.
Confidence can do some heavy lifting at auction, and the biggest confidence booster is certainty that your finances look good. Auctions are binding agreements. If you commit to paying a figure you find out you can’t afford, extracting yourself can be difficult and expensive.
ME provides conditional loan approval so you can head to the auction knowing exactly what you can pay. With pre-approval in place, you’ll bid with confidence, wind in your hair and keys practically in your hand.
4. Don’t buy a lemon (unless you want to).
Pre-purchase pest and building expenses should be non-negotiables. It’s an extra expense but so is having your walls pieced back together because termites chewed through them. Even if you’re buying a property with renovation in mind, knowing what you’re up against is a no-brainer.
In addition to inspecting the bones of the place, have your solicitor or conveyancer check the sale contract for anything that needs extra attention.
Finding an issue doesn’t have to mean walking away, either. You can still go ahead with the purchase, but with the added benefit of knowing what to expect.
5. Stay frosty.
Staying cool in auction conditions isn’t easy. They move fast. If you’re not careful, you’ll be bowled over by a fast-talking auctioneer and his umbrella-wielding sidekick. Doing it all in public only adds to the pressure.
It can be rotten to feel like you’ve lost control, and sometimes it’s hard to stop your emotions taking over. Remember, you’ve done the hard yards to get to this point. If bidding exceeds your max budget or you start to feel stretched, walk away. You might even get a pro to come in and bid on your behalf as a buyer’s agent, so you can have a quiet panic in private.
No one is completely calm on auction day. It can feel like being stuck on a carnival ride and not knowing where your mum is. Planning ahead will put you on the track to success.
Do your homework, check out the action first-hand and make sure your finances are in order, then put on your Saturday morning best and get bidding.
This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.