5 Tips for snaring a house at auction
It feels like a battle ground. Eager buyers pushing each other to the extreme, to fight to be the last person standing at many of our weekly auctions. A hot market can force buyers to act out of emotion and fear in fighting for the keys to a new home. In the market we are confronted with now, there are key things that you can do to prepare yourself and improve your chances of success at auction.
1. Research and more research
Investigate pre-auction what is a reasonable sale price for similar properties in the area you are looking at. Research comparable sale results based on number of bedrooms, bathrooms and similar sized properties, Understanding that in many cases properties are selling above the reserve, you need to set a limit based on what your research shows is reasonable to buy a given property. Otherwise it could pose an issue with your bank if they don't value it at the same price.
2. Be preapproved
It's a dangerous game, especially in this market, to buy a property at auction without having been full preapproved. When a number of banks are not fully assessing preapprovals, it is important to work with your broker to have them advise you which banks are fully assessing preapprovals. Know exactly where you stand, with the sign off from a bank.
3. Multiple inspections at different times
Inspect the property more than once. Try to visit the property at different times of the day. If it is an older property, consider arranging building and pest inspections before auction day. You want to uncover any serious problems before deciding to bid.
4. Negotiate the deposit prior to auction
The assumption is that a standard 10% deposit is required to buy at auction. However, speak to the agent if your situation prevents this from occurring, to see what else is possible. It is at the discretion of the agent and buyer as to what deposit they require. Ask the question especially if your money is tied up in the sale of another property.
5. Making a offer pre auction
While we all assume that a seller will not accept offers pre-auction, if your offer is above the reserve price and the conditions on the offer suit the seller, some sellers may bite. You never know the situation of the seller or what the current level of interest is. While many sellers prefer to let the market decide at auction what their property is worth, a carefully crafted offer sometimes can pique the interest of certain sellers.
To sum up
Accepting that auction situations are stressful and emotions can run high, the best thing you can do is to work out how much you can borrow and what you can afford before auction day, and have had a bank sign off on your preapproval. Understanding your limits and what is affordable can help in resisting the urge to push further than you should on the day.