Buying a property at auction requires you to do your homework before attending the actual event. The auction atmosphere can be overwhelming for people who are new to the experience, so it's important for you to be prepared by learning more about what you should do on the day if you want to make a purchase. Here are some key tips that you can use to get yourself ready for auction.
Before auction day
In the days/weeks leading up to the auction, you should get you and your finances ready. Buying a property at auction is a huge financial commitment, so it is essential for you to understand what you're getting yourself into before the hammer drops.
- The contract that you will be required to sign shortly after the close of the auction contains a lot of information that you need to know prior to making a bid. Get a copy of this contract before auction day. Your solicitor can review the contract and advise you about whether the purchase would be a good idea.
- If you are working with an agent during the property auction process, you should receive a schedule for auction day. Review this schedule to determine when the auction for the property that you would like to bid on will be held.
- If you need to borrow to purchase the property, you should get your finances in order before auction day. Consult your mortgage broker and find out exactly how much you can afford to borrow and thus bid at auction.
- Take care of inspections to ensure that the property is not in need of major repairs.
- Have your deposit ready well before auction day. Most auctions require you to put down a deposit of 10 percent of the purchase price.
On Auction Day
The problem that many people encounter when auction day arrives is that the bustle of the auction can make it hard to focus on holding to the plan you devised prior. Following through with the plans that you made during the preparation stage can put you ahead of the game when you arrive at the auction.
- Always be early for an auction. This gives you an opportunity to go over the bidding conditions again, inspect the property if the auction is being held there and ask any last-minute questions that you may have.
- Listen to the announcements that the auctioneer makes before bidding begins. These announcements provide a review of the legal regulations that relate to the auction.
- If you decide to send someone on your behalf to bid on a property, be sure that the bidder has in their possession a letter authorising them to do so.
- If you are the highest bidder when the reserve price has not been met, be prepared to negotiate privately with the seller
Find out how a mortgage broker can help through this process by understanding your circumstances, needs and goals.