Buying real estate can be daunting at the best of times and auction can certainly add to any buyers anxiety, here are a few basic tips for anyone considering a purchase via the auction process. These are some tips that should help:
Present an offer
The best way to let an agent know you are interested is to place an offer on the property. This has two main benefits to you – you are letting the owner know you are interested and also establishing if you can buy before the auction. Making your interest known this way will ensure (to some degree, depending on how strong your offer is) a good agent will come back to you in the event that the property may be sold prior to auction to another party. This way you are at least provided with the opportunity to buy. Your offer will need to be considered reasonable which your agent should provide guidance on. Talk to the agent about the terms of your offer too i.e. settlement dates, deposit amounts etc. You should present your offer in writing.
Conduct your due diligence
Building and pest reports and have your solicitor/conveyancer review the contract. One of the most important elements is having your finance ready prior to auction, remembering when you buy in the auction process there is no cooling off period. If you are the highest bidder subject to the reserve price being met you will have to buy the property. Ensure you tell your finance institution you plan on buying at auction
The Big Day
You will be required to register to bid which is typically done on the day just prior to the auction starting. Bidding is done by showing your provided bidders card to the auctioneer and stating your bid/offer. If your bid is considered too low the auctioneer will let you know and can refuse a bid that they consider too low. The Auctioneer has a legal right to submit a bid on the owners behalf, known as the “vendor bid”. This bid is not always used and will be clearly announced as a vendors bid if it is made.
Over my career I have seen just about every bidding strategy possible and I still find that the most active bidders tend to be the winners. Bid strongly, speedily and loudly. These attributes have seen more people win auctions than any other approach I have seen, like “wait til the end”, or waiting until its announced “on the market”, or reducing the bidding increments to slow it down among others. These tactics attempt to hinder the auctioneer or the process when your real job should be to hinder your opposition which is other buyers! This is best done in a more pragmatic/aggressive bidding approach which you can still set yourself a limit for.
These are only a few tips I hope you find helpful. There are many other elements to an auction from start to finish that I’m always happy to elaborate on. Just reach out anytime.
