If you’re in the market for a property – particularly in the larger states – there’s a good chance you’ll be needing to purchase the home through the auction process.
While buying at auction can be daunting for a new buyer, there are a number of steps you can take to make the process easier.
Understand your finances
Getting your finances organised well in advance is one of the most important stages of the auction process, because it can give you a much clearer picture of what you’re able to afford. When buying at auction, the sale is unconditional, meaning you have to make sure your odds of getting finance are high.
This all starts with talking to your mortgage broker about getting pre-approval. You will typically get an idea of how much a bank might lend you based on certain conditions and that will allow you to hone in on certain suburbs and price points with your upper limit well-established.
Know the market
One of the big issues auction buyers have faced over recent years has been getting blown out of the water on auction day. Normally, agents will issue a price guide – but this isn’t always the best indication of what a property might sell for.
A better approach is to start doing your own comparative sales analysis on your suburb of interest. Compare recent sales for the same location, property type, size and age of the dwelling to get a clearer picture of what those types of properties are selling for. More often than not, properties will sell in a close range within a certain suburb.
Do your inspections
The fact that an auction is an unconditional sale means that you need to have everything organised well in advance of auction day. Meaning that any inspections you need to have done (or if there’s any information you want from the owners) should be sorted out early.
The more organised you are, the better.
On the day itself, it pays to be prepared. It can be a good idea to go to a few auctions in advance as an observer, just so you know the process and get familiar with some of the jargon.
It’s good to be confident and be prepared to bid strongly. That can help to give the impression you’re there and ready to buy.
When markets are a little cooler, many owners and agents are prepared to accept an offer prior to auction day.
If you’re prepared to put up a fair offer, it is worth exploring this option. If there aren’t multiple registered bidders, an agent might just choose to accept an early offer instead of going through the process.