How to buy a house at auction – 8 essential tips
I love Real Estate auctions. From the awkward silence before the first bid, to the grand finale where two parties battle it out with a subtle hand raise or nod of the head. The energy and excitement is unbelievable to be a part of. But when you’re actually there to buy your dream home it can be a very nerve racking and emotional experience – especially if you’re not prepared.
If I could only give you one tip for preparing yourself for an auction, it would be to read the 8 tips below. They’ll give you the very best chance of having a strategy that will win you the property you want and make sure you don’t overextend yourself.
1. Do your own research
Buying a property is usually the biggest purchase people make so it’s important take the time and do your homework. Most agents and valuers will use historical sales data to compare a property’s value but the only way to get an accurate idea of what similar houses are selling for in the area is to sacrifice a couple of hours on your Saturday’s and attend some auctions.
2. Get comfortable with auctions
The only way to get comfortable with how an auction works… is to go to auctions. Pay attention to how the auction is run, the auction rules, the etiquette, the questions being asked by other bidders and the strategy of the winning bidder. The more auctions you go to, the better you’ll understand the process and the more comfortable you’ll feel when it’s finally time for you to put your hand up.
Most auction are on the market for 4 week prior to the auction and it’s worth inspecting the property several times during the campaign to ensure you don’t miss anything and the property ticks all your boxes. You’ll also get to hear what other questions people are asking the agents so you know what you should be asking when it’s time for you to buy. Take the time to also get familiar with the local area and see what it has to offer – proximity to parks, schools, transport and shops are all factors which will effect the price. If you really like the property and your research suggests it will be in your budget, you may want to have it inspected by a professional to make sure it’s structurally sound.
4. Seek legal advice
The Contract of Sale can be a complicated document, even for the most seasoned investor. You should consider having the document read over by your solicitor or conveyancer. They will be able to recommend any additions or variations to the agreement – or highlight some unfavourable items in the contract you may have missed. It’s important to make sure you understanding exactly what is to be included in the sale – all fittings, furniture and any other relevant items should be clearly listed.
5. Know your limit
You’ll want to know exactly how much your bank will lend you before you start going to auctions. By winning at an auction, you’re entering into a binding contract and may lose your deposit if you can’t get your finance organised in time. Speak to your lender and find out how much they’ll lend you so you can set your maximum limit for the auction.
6. Keep Calm
As anxious and nervous as you might feel when bidding at the auction, you need to have a plan – and you need to stick to it. If you think it might be a little too much for you, you may want to have a friend or family member come with you to bid on your behalf. Make sure your designated bidder knows your strategy and budget if they’re bidding on your behalf.
7. Bid with confidence
When it’s time to put your hand up, do it confidently. After going to lots of auctions and speaking to lots of under-bidders, the most common reason they stopped bidding was because they thought the winning bidder just would have “kept on going”. Most of the buyers tell me that they only had a bid or two left in their budget. The way you bid at an auction can give you a big psychological advantage over the other buyers on the day, so don’t be shy.
8. Stick to you plan
If you’ve followed the steps above, you’ll know exactly how much the bank will lend you and what similar properties in the area have recently sold for. So when it comes to auction day, be confident in how much you’re prepared to bid up to and stick to what makes financial sense for you. Auctions can get quite intense and it’s easy to get caught up in the excitement and emotion of the moment, so have a clear plan and know how much you can afford.. and stick to it.
Auctions really are exciting and by doing your research and sticking to your auction strategy, you can bid with confidence