What you need to know before bidding at auction
Australia sells more homes at auction than almost any other place in the world, and every weekend hundreds of home buyers head to auctions all over the country to try their hand at winning their dream home. While winning the auction ultimately comes down to how much money you have to spend, there are several other things you need to know before bidding at auction that will ensure you are prepared and in the best position to win.
1. Be prepared
Go to your financial lender of choice and find out exactly how much you should be able to borrow, then set yourself a maximum bid, bench your emotions and be prepared for the fact that someone else may be able to spend more money than you. Keep in mind you will need to pay Stamp Duty and other fees when working out your maximum bid.
If you’re someone who struggles to keep their emotions in check - which can be hard to do when your dream home is slipping into the hands of someone else - get yourself a Buyer’s Agent, they’re professional buyers who can bid for you and keep the offers realistic. Ensure you have all files and documentation on hand and ready to go should you win the auction.
2. Do your research
Spend some time investigating what other homes in the area have sold for to ensure you don’t overpay for a property. Go to a few auctions to get a feel for how it all pans out before heading to the auction you plan to bid at. Check if there are any council plans for new buildings, businesses or public transport hubs to be built near your potential home and decide if you’re happy with the development, or if you would prefer to look somewhere else.
3. Interrogate the real estate agent managing the sale of the property
From the moment you walk in the door to inspect the property you want to buy, see if you can learn the seller’s motivation for taking the property to auction and how much interest there is in it from other buyers. Keep in mind the agent does work for the seller, so they may avoid disclosing too much information.
4. Plan your bidding strategy
Have a plan in place for multiple scenarios that could occur at the auction. You might be the only buyer to show up, or there might be many people bidding, pushing the price up quicker than you expected. There’s no problem with making a conservative offer if you’re the first bidder, however there are theories that making a high first bid will scare other buyers off. However, this plan can backfire if you end up the only bidder. In any case, try not to outwardly project too much eagerness. Don’t be afraid to offer a smaller amount than what the auctioneer is calling for either, they may request another ten thousand, but don’t hesitate to offer only five thousand more.
5. Have an auction day support person
Auctions can be an emotionally charged event that bring out a competitive streak in your personality you never knew existed. Bring a trusted friend or family member that is level-headed and has your best interests at heart. Tell them what your maximum budget is and why, and give them permission to call you out if you’re making unrealistic bids. On the flip side, if you’ve been to several auctions and had no luck, a support person can project the positive vibes you need to get through another loss. Remember, it’s just a house, and there’s always going to be another one for sale.
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