So the house is ‘for sale by Auction’ - this puts a lot of new home buyers off – but get to know the process and you will be able to make good decisions about buying at auction. This article is here to help you with thinking about buying a house at auction and what you need to do before you go to the auction to bid.
Buying at Auction
Houses for sale by auction are rarely advertised with a price – this is often the reason for the Auction – the price of the property is hard to determine – and the seller of the property has decided that there will be enough unconditional interest in the property to make an auction a good option for selling & determining a market value. So you need to work out the price for yourself – you are ‘the market’ after all!
Sometimes a vendor is only after an unconditional sale, quickly, and an auction is seen as a way to achieve this – so don’t assume that if a house is for sale by auction that there is going to be lots of people interested or that you are going to have to pay a premium – you may be the only one who turns up on the day...
The Marketing Campaign - Before the Auction
A house for sale by auction is usually marketed over 2 – 4 weeks with the auction date included on all the marketing information for the property. If you want to buy a house for sale by auction you (usually) need to bid. You do not have to be at the auction in person, you can organise to bid over the phone, or you can send someone to bid on your behalf.
Sometimes, in the fine print, a vendor is open to offers before an auction, be aware of this and make sure you register your interest in the property with the real estate agent so that if any pre-auction offers come in – you get a chance to put in your offer too. A good real estate agent will never turn down to opportunity to create a competitive offer situation!
Buying at Auction is an Unconditional Offer
When you buy at auction you are buying unconditionally. This means that if you are the highest bidder, and the reserve is met, you have effectively made a cash offer that has been accepted and this is legally binding. If you are unable to make a cash offer, don’t give up, if a property does not sell at auction, conditional offers will usually then be considered.
Therefore, if you are planning on buying at auction, you need to make sure that all your conditions have been satisfied before you bid. Get your property valuation, building inspection, and your LIM, confirm your finance, get your lawyer to check the title and make sure you have done your personal inspections and research into the property.
Get Familiar With the Auction Process
Attend a couple of auctions as a spectator before your auction - find out who the auctioneer is going to be at your auction and check out their stlye - some are a lot more understandable then others, and most have different techniques for handling vendor bids.
Let's Do it! Buying at Auction
By the time you are standing (or sitting) in front of that auctioneer you have probably already spent a fair bit of money on the house. It is very important to not let that affect your bidding.
You need to set a budget and stick to it! Easier said then done when you already have an emotional and financial investment in the house. Perhaps someone bidding on your behalf is a better way to go...
The Propertytoolbox Home Buyers Guide