There is nothing quite like the atmosphere of an auction; the air thick with anticipation and competitive spirit, the eagerly gathered crowd, and the life changing possibilities if your bid is accepted.
Thousands of auctions happen across the country every week and much of their popularity is surely to do with the transparency and accessibility of the process to the general public. Auctions offer a clear and secure process for home owners and buyers to navigate the sale or purchase of a property. The auction process also allows the marketplace to decide property values and gives everyone a fair chance at snapping up their dream home.
Prospective buyers should research a property before auction, arranging any necessary building inspections, pest inspections or Contract of Sale enquiries (through a solicitor or conveyancer). Familiarise yourself with the Contract of Sale and make sure you have asked any questions to clear up things you’re unsure about. It goes without saying that you should be sure you have, or will have, access to the necessary finance for the property if your bid is accepted – you will need to be able to pay the deposit on the day (normally 10 per cent). Working through all of these points will help confirm your decision about whether to bid on the property or not on auction day.
Try to arrive a little early on auction day. This allows you time to view the property once more and speak to the agent to make them aware of your intent to bid. Once you have done this, find yourself a good position, ideally standing within the agent’s line of vision. When you bid, speak loudly and confidently so you can be heard and also to let the competition know you’re serious. Buyers with doubts will soon fall out of the bidding war if they know you are on a mission to buy.
The auctioneer will normally run through the terms of the auction, and the Contract of Sale, before calling for opening bids. Things usually heat up once the auctioneer announces ‘the property is on the market’. This indicates the vendor’s reserve price has been reached and the property will be sold to the highest bidder. If this is you, congratulations! Get your chequebook out to pay the deposit, sign the contract and crack open a bottle of champagne because you have now secured the purchase your new house!
Sounds pretty straightforward right? Preparation is key as is maintaining a calm demeanour. Remember not to let your emotions get the better of you – know your budget and bid to the level you are comfortable with. Your goal is to be the highest bidder – even if the bidding fails to achieve the reserve price – as the highest bidder is usually offered the first opportunity to negotiate if the property is ‘passed in’. As mentioned earlier, make sure you have conducted all necessary research about the property and you can afford to pay for it. There is no cooling off period for purchases at auction.
For more detailed information about buying a home why not download the First National Real Estate Home Buyers Guide?