Auctions can feel a little like a lottery unless you’re prepared. It can be risky to register and raise your paddle to bid unless you know the approximate value of the home and your spending power.
Those who go into an auction blindly, run the risk of losing their dream property or, worse, over-extending themselves.
A few signs give these people away in an auction. Often, they’ll watch without making a move, or be active in early bidding but retreat when bids approach market value as they get nervous. A rarer, third signal are those who push the price unreasonably beyond market value.
To avoid falling into these categories, research the local market and the prices being attained for homes of similar style.
Don’t fall into the trap of believing Australia has only one real estate market. It doesn’t. It has thousands – all of the suburbs, even neighbourhoods, which differ in desirability, position to amenities, access to transport, work opportunities and CBDs.
So, before you take the next step, be sure you know the price trends of the local area and price bracket of similar properties that have sold in the past three to six months.
As your agent, we can give you great insight into these elements of your homework. We also invite you to introduce yourself during an inspection and discuss the local market and even prices expectations for a specific property.
This all helps you build a picture for that moment when you enter the fray of an auction and hopefully win the home of your dreams or your next investment property.
Here are some additional tips.
- Obtain a pre-approved loan. You must know your spending limit. The pain of getting in too deep, even for a property you love, is stressful and potentially ruinous.
- Attend the inspections. Have a chat with the agent, and make sure they know you’re a serious buyer. This will help down the track. Ask for the contract of sale and consider whether you might commission building and pest inspections. Also listen to the comments of others walking through the property. That’ll give you an insight into its desirability.
- Don’t be afraid to make an offer before the auction. It should be time-limited to put the vendor under a little pressure.
- Go low or be realistic? Obviously, you want to pay as little as possible. But there’s no point insulting the vendor. The agent will ask how you arrived at that figure and your answer should be based on research, not opinion. Really low offers will rarely get you the property. If you want to scoop it up before auction, be in the ballpark.
- On auction day, arrive early. Register with the selling agent and take time to chat about the property and the level of interest in it. Show your ID, and in return, they’ll give you a paddle with your unique number on it. You cannot bid without this.
- Position yourself strategically within the crowd. You want to see everyone and gauge from body language the serious buyers and their spending power. You can usually tell when someone reaches their spending limit.
- Remind yourself to bid with confidence – and to breathe!
- If the auctioneer is struggling for a first bid, be courageous. But don’t go in with a round number like $500,000. Instead, offer $485,000 as this means there’s a temptation for bidding to move in $5k increments instead of $10k.
