When you're attending a property auction, there is no denying your end goal is to place the winning bid and secure the property.
While this task seems simple enough, anyone who has attended an auction will tell you that the tense atmosphere combined with the competitive nature of property auctions often makes it difficult for people to secure the property without prior experience.
Of course, not all of us have experience buying at auction. For those that don't, here are a few tips to help you snap up your desired property.
Prepare before the big day
Property auctions move fast, and people who have not attended these events in the past often get lost in the shuffle. If you have your eye on a property that is up for auction, it's a good idea to start attending other property auctions now. You can simply observe how the process plays out.
In addition, it is a good idea to discuss quoted prices with agents. By discussing the quoted price with a real estate agent, you can see how this quoted price compares with the actual auction price.
Keep your bids a secret
You may be tempted to let your high bid limit slip when chatting with other auction attendees, but it's important to keep this information a secret until you're actually placing the bid. Letting the agent or the seller know how high you're willing to go will only work against you. The only purpose that this information can be used for is to ensure that the price goes as high as your limit, so there's no benefit to revealing your limit before you start bidding.
Consider hiring a representative
The auction atmosphere is not for everyone. If you are purchasing property for personal use, you may feel emotionally invested in winning the auction. Your emotions could get the best of you during the bidding process, and the end result is often losing the auction or spending more than you had planned. Third-party bidders can alleviate the stress of participating in a property auction by bidding on your behalf. These professionals are experienced in dealing with the fast-paced auction process.
Time your bid carefully
The timing of your bid is essential. Bidding too early could cause you to lose as prices get pushed up in the momentum of the event. You could wait until the last minute to try to slip in your bid before the hammer falls, but this auction technique is risky. The best time to place your bid is after vendor bids have been placed.
It's easy to get caught up in the auction atmosphere and ultimately go over your limit. But, bidding more than you can afford puts you in a tight spot when it comes time to secure financing. As such, it is important for you to have a limit and stick to it, no matter the outcome.
There are certain rules that you will be expected to follow when you buy a property at auction. Failure to comply with auction rules and terms could be considered a breach of contract, and there may even be legal consequences if you fail to follow the rules. Get to know what is expected of you before you attend the auction to avoid any problems.
Legally binding auction rules
The rules of the auction that are legally binding can vary from one state to the next, but here are some general laws that relate to most property auctions.
- Sellers are usually able to make one bid on the property. The auctioneer will announce this bid as a vendor bid. Some states allow sellers to make more than one bid.
- Auctioneers will announce the bidder when requested to do so.
- People who have not bid on the property are not allowed to say that they have placed a bid.
- Bidders are not allowed to disrupt the auction.
There are some terms of bidding at auction that are not formally written out. However, these implied regulations are followed by people who are experienced in bidding on properties at auction. Getting to know these rules will help you establish yourself in the property auction community.
- Read through contracts on your own instead of believing what others tell you about these terms. Auctions can be very competitive, so you shouldn't expect your bidding competitors to let you know about how the process is going to work.
- Agents are notorious for undershooting the start price that they give you before the auction begins. If your budget is close to the quoted start price, you may be out of luck.
- Rely on your solicitor to advise you about the legal implications of bidding on a property at auction. Some people rely on agents, but auction agents are interested in making a commission.
- Your highest bid should be a secret until it comes time to make this bid. Revealing this information gives competitors an edge.
The number of rules and terms that you have to follow when you are going through the auction process may seem daunting, but you'll become more familiar with how auctions work as you attend more live events and accrue experience.