March 29, 2016
Buying your first home at an auction can be thrilling, but it’s hard not to get swept away in the atmosphere and bid above your budget. See our tips below to keep calm and maximise your chances of securing your property at the right price.
Undertake pre-purchase inspections
Organise a pest and building inspection report long before auction day. If the report identifies key faults, ask the selling agent if you can take your builder for an inspection of the property to get an idea of likely repair costs.
Ask your solicitor to check the contract
Do not bid on a property until your solicitor has given you the all-clear. Contracts for sale by auction are complex and without the benefit of a cooling off period, you’ll have to live with any nasty surprises about the property if you're the highest bidder.
Arrange loan pre-approval
Making a bid at auction without the certainty of loan finance is a very high risk strategy. It makes more sense to secure loan pre-approval as this will give you confidence as a bidder and set an all important limit on your bidding.
Set a limit and stick to it
With loan pre-approval you should have a good idea about how much you can afford to pay for a property. But you should only pay what you think the property is worth based on similar homes in the area. Paying more could mean waiting years for your home to grow in value.
Register to bid
Check if you need to register to bid. This is a requirement of some state governments, and where it applies you will be given a bidding number to use. You may also want to consider using a friend or buyers’ agent to bid for you.
Get your cheque book ready
If you’re the winning bidder on the day, you’ll be required to pay a deposit of 5-10% of the purchase price on the spot.