A great way to find value in real estate is by purchasing at auction. That said, many buyers avoid the auction scene out of fear that they might pay too much. Auctions can be intimidating for this reason, but a little planning can put you at ease with the process and help guide you to auction success.
Do your homework
The first rule of auctions is: it’s sometimes possible to avoid the auction! Vendors are often receptive to offers made before auction so it can sometimes be possible to win the race before it even begins. Even if you’re not able to secure the property prior to auction, there’s no reason to be intimidated by the auction process.
The first step in the lead-up to the auction is to bring the contract to Conveyancing Solutions for a thorough review. Our experienced team of licensed conveyancers will be able to advise you of the conditions of the contract, highlight any red flags and negotiate any changes that may be needed.
You’ll also need to review building, pest and strata reports to make sure everything is in order. Be sure to attend the property viewing prior to the auction and compare the property against similar ones in the surrounding area. Express your interest to the agent if you are prepared to bid on the property and request to be notified of any offers made.
Before the auction it is critically important that you establish a bidding limit for yourself based on your research and current financial situation. It’s important that you not get carried away on the day and bid beyond your means. You should also hold your cards close to your chest so as not to tip your hand (by giving away your maximum bid, for instance).
Different rules apply
It’s important to understand that different rules apply to property purchased at auction. The chief difference is that there is no cooling-off period after an auction. If you win the auction, you are legally obligated to go ahead with the purchase, so be sure you are in a position to do so.
All bidders must register prior to the auction in order to place a valid bid. The auctioneer will set the amount for bid advances but bidders are allowed to suggest alternatives.
Auctioneers are under no obligation to share the reserve price of the property, but you’re certainly within your rights to ask. The seller is also allowed to bid on the property and these bids will be identified by the auctioneer. Dummy bids – when a fake buyer bids in order to drive the price higher – are illegal but unfortunately do sometimes occur.
With this forward-planning and some assistance from your friends at Conveyancing Solutions, you’ll be well on your way to success at your next auction.