So you want to buy a house by auction or your dream property is for sale by auction? A lot of people are slightly scared and put off by this, even though there is no need as long as you do your homework and come well prepared.
First you should research the property of your choice: Get all necessary reports done prior to auction date, e.g. lim report is pretty essential, building report might be important unless it is a newbuilt, electrical etc. So yes, you might have to invest some money here but in the big scale of buying a property these investments should be made just to be on the safe side. Another important point is to question the real estate sales agent as much as you can think of. He/She will have to answer truthfully. So a good essential question could be: is there anything else I should know about this property?
You will also need to sort out your finances prior to auction date. You should speak to your Bank Manager and explain to them that you would like to purchase a property at auction and set your limits with your bank. You also need to sort out the 10% deposit you will have to pay on the day of auction if successful. So, make sure you have your cheque book!
After that you can register your interest with the real estate company that sells your dream home. You should find out the possession date, chattels and any other conditions to the sale. This is also the time when you can apply to change any of these. You want to move the possession date? It is just a matter of asking and if the owners are flexible they might make an exception for you.
Auction day itself is all about your nerves. If you are anything like my wife and can’t keep your emotion under wraps then be a telephone bidder rather than showing up in person. Now, to the actual events at the auction. There are a lot of tactics out there and various people swear by their techniques. I will be sharing what I personally would do on auction day but there is never a guarantee that it works or that someone will tell you a ‘better’ way.
I would never place an opening bid simply because you are giving too much away. If no one is willing to place one then usually the auctioneer will place one on behalf of the vendor and this is much better for you as you then know where you are at. After that first hurdle it all depends on the amount of interest on the property. If there are lot’s of people placing bids I would definitely not join in until right at the end. If it is only between you and one other group there are two scenarios. Some people aim to lower the price by trying to make the smallest price increments possible and the others try to put their competition off by jumping in larger steps. Both ways have their place here and in my opinion a mixture of the two is usually the most successful way.
I hope this entry helped. Feel free to post a question or comment below whether you agree or disagree with me. Any feedback is welcome. If you happen to have to go to auction feel free to call me prior to the date to discuss your strategy or help you out with a price indication. Thanks for reading!