The Survival Guide For Auctions
Buying a house at auction can seem like a daunting prospect. However, with some useful tips about what to do before and during the auction, you’ll be in with a chance of securing your dream home.
Before the auction
- Practice makes perfect: Familiarise yourself with the auction process by visiting as many auctions as you can. Auctioneers use tricks to encourage people to bid, like cracking jokes or hyping up excitement. Spend a little time with the auctioneers afterwards to have any issues you didn’t understand explained.
- Inspect the property before the auction date: If you can, arrange an independent valuation and check for any building or structural matters. You may wish to obtain a building report.
- Work out how much you are willing to pay and stick to that price: Many buyers have three sums in their head: an amount they would love to pay, how much they think the property is worth and their absolute maximum. Do not exceed your maximum on auction day.
- Visit the real estate agent: Ask to see a copy of the contract and conditions of auction, and go through them with a fine-toothed comb – or, if you can, get your solicitor to go over them for you. A good relationship with the agent could mean they contact you should a pre-auction offer be made.
- Confirm the settlement and possession dates beforehand: Do this to make sure it suits your circumstances. Check the terms of sale to see if the vendor is contracting out of any obligations under the vendor warranties. Know your legal obligations about bidding and work out any insurance issues.
- Finalise your home loan arrangements: Make sure you have your deposit ready as you will need to pay it on completion of the auction.
During the auction
- Stay relaxed: Auctioneers will sniff out interest, so try to show as little interest as possible to encourage the seller to lower their reserve.
- Temper your bidding: Don’t bid before you have to. Wait until the reserve price has been reached before entering bidding as a lack of interest can confuse some bidders and may force the seller to lower the reserve.
- Be aware of vendor bids: This is where the auctioneer will place bids on the vendor’s behalf in order to move bidding towards a price level acceptable to the vendor. These will always be below the reserve price.
- Watch out for dummy bids: Dummy bidders are bidders placed in the pack to deliberately push the price up. This is highly unethical and very rare.
Buying at auction might seem intimidating, but if you do your homework it can be a simple and straightforward way to purchase a house.