9 Tips on Making the Winning Bid at Auction
Are you going to be bidding at an auction to buy a house? This can be very stressful and it's important you follow some rules beforehand to get the winning result. Auctions are designed to bring an open and transparent way to buy a home. Instead of sealed bids for a home sale, you have the prices being yelled at auction. But that doesn’t mean it's easier to secure the home in fact if you don’t do some research then you could either moss out or overpay!
Here are some tips to help you prepare and increase your chances of winning at a home auction:
1. Do Your Research
Well before you plan to raise your hand at the auction you should have done the research. When you decide to sell or buy, watch the local real estate market. Check recent sales data for similar properties in the area to get an idea of the property's value. Look at how many homes sell before the auction and how many get passed in. This will give you an idea of the right value for the home and if you might be able to make an offer before the auction.
2. Set a Budget
Determine your budget and stick to it. It's important to have a clear idea of the maximum amount you are willing to bid on the property, including any additional costs such as conveyancing fees and repairs. If you are borrowing from the bank they will also have a set limit so it's even more important you know the associated costs of buying so you don’t go over budget. Include stamp duty, conveyancing fees, pest and building inspections and any other associated fees.
3. Attend a Few Auctions
Attend other auctions to get a feel for the process and to see how bidding works. This can also help you become familiar with how auctions work and take notes on how the winning bid was made. Plus the more auctions you attend the more inside tips and tricks you will gain but most importantly you will come with a better understanding of your auction and know how they work.
4. Have Your Finances in Order
At most auctions If you win the auction, you will need to provide a deposit and sign a contract immediately. Make sure your finances are in order and that you have the necessary funds available to complete the purchase. Your banker will be familiar with the auction process so keep them in the loop and they will let you know what the bank needs. Generally, you have a letter of pre-approval for an amount from the bank and once you sign the contract that starts the loan being actioned.
5. Get a Conveyancer
Any time you purchase a home there are legalities involved. The most important if which is transferring the title of the home into your name otherwise you don’t own the home. That is essentially what a conveyancer does and it's a good idea to engage one before making the first bid at an auction.
The following are the role of a conveyancer:
- Researching your properties and titles
- Preparing and lodging your legal documents
- Contacting financial institutions about your deposits and payments
- Calculating your taxes and other costs
- Representing your buyers during property settlement
- Conveyancers will check that all the required documents meet the legal requirements of the state or territory at every stage.
- They will transfer ownership of the property to your name and also attend the settlement
6. Building and Pest Inspection
Let the real estate agent know you are a serious buyer and ask to see any pest and building inspections of the home. If they don’t have any you can ask if these can be put in the contract as a subject-to-sale clause. And then conduct your inspections after the auction if you make the winning bid. This is something you should discuss with your conveyancer as they can do the legal legwork and get this clause in the contract.
7. Register to Bid
Register to bid before the auction starts. This will ensure that you are eligible to bid and will also provide you with any necessary information about the auction.
8. Arrive early
Arrive early to the auction to get a good seat and to give yourself time to review the property information and any legal documents.
9. Be confident
When the bidding starts, be confident and assertive in your bidding. Don't be afraid to make the first bid if no one else is bidding yet. It's important to keep in mind that winning a house at auction is not guaranteed, as it depends on a number of factors including the competition, your budget, and the condition of the property.
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