Questions to ask myself before buying at auction
Am I financially prepared to buy the property?
If you’re ready to bid, you’ll want a home loan pre-approved before the big day.
Am I 100% sure I want to buy this property?
There are plenty of properties out there, so you don’t necessarily need to choose the first property you see advertised. To help with your decision making, you may ask yourself:
Have I thoroughly inspected the property?
Have I completed a pest and building inspection?
Is the property in the ideal location for me?
Does the property have the right amount of bedrooms and bathrooms?
Am I in love with the property’s appearance?
Can I see myself living here 5+ for years?
There’s no cooling off period when you buy at auction so if you win, you’re locked in.
We asked Tony Dion, Property Consultant and Mortgage Specialist at Petrusma Property Hobart for his top three tips for buying at auction.
Tony says, “One, understand what you are buying – have a builder review the property and a conveyancer run their checks. Two, understand the full borrowing power available to your circumstances by checking several lenders through a broker. And three, understand in advance the highest bid you’re able to go to, to enable the purchase to go ahead and not put you in an adverse financial position.”
Am I familiar with the auction process?
It’s a good idea to familiarise yourself with the auction process by attending other auctions in your area.
Not all auctions are the same and auctioneers can operate very differently, so it’s a good idea to attend a few to learn the tricks of the trade.
Bidding tips for buying a house at auction
Bidding on auction day can take strategy and skill. Here are a few tips to give you a better chance of winning your dream home.
Keep your cards close to your chest
Try and keep your bidding limit to yourself and don’t share the specifics with the auctioneer. Auctioneers can be very persuasive, so by keeping your cards close to your chest, you can avoid being pressured into a price that you don’t want to pay.
As soon as the auctioneer is aware that you’ll pay ‘X’ amount, you’ll be targeted by the auctioneer. Our advice is stay quiet until you’d like to bid, but then bid confidently.
Start low and go slow
Bid below the reserve to begin with, and take your time. The only time you’ll need to bid at a fast pace is if there’s a high level of competition between bidders.
Keeping the auction moving a slow pace allows you to make better decisions, without getting carried away. So, how do you do this?
Commonly, buyers will bid in increments of $10,000. So, instead of bidding up by $10,000, you could bid up by $19,000. This will throw buyers and sometimes even the auctioneer off, especially if you’re up in the millions.
If you’re not confident, have someone bid for you
There are two options when it comes to having someone else bid for you, you can either ask someone who you trust, or hire a buyer’s agent.
Why hire a buyer’s agent? They’re trained professionals who have plenty of experience in the auction yard. If you think your emotions will get to you, you can set out a financial/bidding plan with your buyer’s agent who can make the right bids at the right time.
Or, if you know of someone close to you who is comfortable bidding for you, you can go down that path too.
We also spoke to Cody Bettanin, Partner and Auctioneer at Nelson Alexander Pascoe Vale who said, “Remove your emotion. If you’re already emotionally attached to the property then getting someone who isn’t is the best way.”
Know your limits
There’s always going to be another property to purchase. It’s a good idea to stick to your limits if you don’t have money to play with. Remember, an extra $40,000 over a 30 year mortgage could still add hundreds of dollars to your monthly repayments.