There are many things you must know and understand before diving into this high-stake/high- stress process.
The team at Bliss Conveyancing have put together some of our best tips. You’ll find one that is often over looked – but not by you – after you read this.
- Have your finances in order
It is critical to know that you actually have the money to pay for the house before you even contemplate bidding on it. If you are obtaining finance, you must ensure you have preapproval from your lender and deposit (normal 10% of the purchase price)
- Have your contract checked by a licensed conveyancer.
Behind the scenes of any shiny new house purchase there are the legal issues, you will want to have these ironed out before you go to the auction.
Before any auction, you must obtain a copy of the contract and have it reviewed by your conveyancer.
Your conveyancer will point out any red flags and explain the contract to you explaining any possible risks that come with the property you are eyeing, and at the same time give you advice on how to protect you from them.
Your conveyancer will also advise you of any bargaining chips that you can use during the auction from a legal standpoint, like longer settlement periods, reduced deposits and or additional terms / conditions.
- Make sure you have a professional building report.
An auction sale is legally binding. Therefore, you must know about any potential issue with the home before the auction starts.
Too many people rely on their gut feel, which is incredibly dangerous. No matter how shiny or new the home seems make sure you know what you are buying.
- Check more than just the house condition.
This is one of our favorite tips that is often overlooked.
Prior to any auction there is normally an open house where potential buyer can view the property, they have their eye on. – All Good
However, you should not stop there. If you are thinking of buying an investment property be sure to stake out the neighborhood. Make sure you walk pass at different times. Gauge the noise levels, the light conditions and the traffic volume. Real Estate Agents will often show the property at the best time of the day with the best light and natural ambience. View the home at different times of the day, you may be surprised.
- Register to bid
Prior to the auction you will need to register with the selling agent, you can do this when you inspect the property or on the auction day.
You will need to provide an ID, a card issued by the government or financial institution showing your name and address, such as your license, photocard, vehicle registration papers etc.
Do not forget these on the day.
- Don’t get caught up in the heat of the moment.
A house auction is a wildfire for about fifteen minutes and then the hammer goes down and the sale is final; the contracts exchanged are unconditional and therefore binding on both parties. So it’s important that you stay calm and in control of your bidding despite the adrenaline and competition.
If you don’t win this one, put it down as a learning experience and tell yourself that there’s a much better home waiting for you. You want good outcomes from your buying decision, and getting swept away in the heat of the moment can land you in more trouble than any house is worth.
- Having a bidding limit and sticking to it.
The final crucial pre-auction tip is to prepare you to bidding strategy before the auction day.
Set a bidding limit so you don’t go overboard and become an emotional bidder. The history of auctions is littered with people who literally bid their families into financial ruin, because emotion got the better of them.
You must never exceed your borrowing capacity. However, it is also important not to set you budget too low hoping to home in on that bargain. This just sets you up for regret when someone else snaps up your dream home at a price you could have afforded.