You’ve found the perfect property to buy, but the owners are having an auction. Gulp! Not sure of your next move? Thinking of finding a private sale instead?
There’s pros and cons for homebuyers for both private sales and auctions.
With a private sale, you make an individual offer to a real estate agent. They then present that to the home seller, and they decide who buys from there.
When you attend a house auction, you’re face-to-face with other homebuyers, many of who aren’t first homebuyers. Everyone puts forth their offer in real-time, and the highest bidder wins.
Simple, right? I know what you’re thinking – “But Andrew! Auctions are for in-your-face negotiators! Not your every day first homebuyer!”
If you’re smart and do your groundwork, you’ll improve your chances of landing that dream home.
Win that house on auction day
You’ve finally found that dream home – congratulations! Go through this checklist before you attend that auction. Do so, and you’ll avoid a lot of heartache and disappointment down the track.
- Get pre-approved for a home loan
Now is not the time to wing it, dear first homebuyer. There’s much groundwork to do beforehand, and I recommend you begin with pre-approval from your lender of choice. Get your friendly and professional mortgage broker to help you find a home loan that’s right for your budget and needs. It’s our job to help you! - Have your conveyancer on call
A conveyancer is responsible for drawing up the paper work that officially declares you the homeowner. You don’t legally need a conveyancer, but trust me when I say that all that legal jargon can be confusing for the average homebuyer. A conveyancer won’t miss a thing, and will work in your best interests. Make sure you engage with one beforehand, so you’re all ready to go when you win that auction. - Inspect the property beforehand
You wouldn’t buy a car without at least poking your head inside before the sale, would you? Same goes for a house. If you’re about to commit to a mortgage, you need to make sure this house is worth the emotional and financial investment. Don’t just take a stroll through the property – make sure you have the place inspected by a professional to check for termites, bed bugs, safety hazards and any major defects. There are no refunds on house sales. - Check out other auctions in your neighbourhood
Anyone is welcome to attend an auction. It might sound like a strange way to spend your Saturday morning, but watching others in action will help you get a feel for bidding strategies. You’ll also familiarise yourself with the bidding process, and get a taste of all the wacky types of bidders you might encounter on the day. Most importantly, it helps to see what other properties are selling for in your area. Knowledge is power. - Stay cool
Understand that the auction agent is working in the buyer’s favour. This means your feelings, concerns and dreams of having a seesaw out the back aren’t of any concern to them. For these reasons, it’s best not to tell them your highest bid or any sort of range. - Set your budget
Unlike with a private sale, there’s no cooling off period at an auction sale. You’ll need to decide on your maximum bid beforehand, because there’s no backing out once you’ve won.When you’re at the auction, your emotions – and everyone else’s around you – will be all over the place. That’s no state to be making major decisions in. Think about how much you’re willing and able to pay when you’re in a calm and relaxed state. That way, you won’t make any impulse decisions that could seriously hurt your finances in the long term.
- Register to bid
How awkward would it be if you tried to bid, but you weren’t registered? Bring along your driver’s license as formal identification, and arrive early to register. - Pay someone to do it for you
Not comfortable with bidding? Not everyone is. This is where you can hire a buyer’s agent to swoop in and take care of the auction for you. Their fees will be covered by the better price they can negotiate for you. - Call a mate
Alternatively, if you’ve got a mate or a family member who’s particularly good at winning friendly arguments, send them in your place. You’ll need a letter of authority to do this, and provide it to the auctioneer before auction day. - Don’t be a moron
There are many different people you’ll encounter at auctions. There’s The Peacock, who’ll try to intimidate the auctioneer and other bidders with fancy clothes and a flash car. This tactic doesn’t work. Nor does being overly aggressive and yelling in people’s faces. No one likes the Tough Guy, and they rarely come out on top at auctions. There’s even laws against this type of behaviour, and fines do apply. Be respectful of others – no one wants to sell a house to an idiot.
Attending an auction can be an exciting experience, particularly if it’s your first home. But 90% of the success comes down to the preparation you do beforehand. Get yourself organised beforehand, and you’ll be decorating your castle in no time.
Good luck!
Need a quick reminder before auction day?
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