Are you looking to buy a property in Melbourne? Many properties are sold via auction and it can be quite a daunting experience for many. Here are 5 tips for buying at auction.
Read this if you are buying a property at auction
Buying a property at auction is often unavoidable in Melbourne as most of the better buying opportunities are offered for sale by auction. There are a lot of unknowns and it can be an exciting, emotional and scary experience at the same time. But, there are some things that you can do that can make the whole process a little bit easier.
1. Do your research
Know the market in the suburb you wish to buy in. What are comparable recent sales in the area and how does the property compare? Make sure you do your research and stay up to date so that you can assess the true value of the house. Attend multiple auctions in the area so that you are comfortable with the format.
We have attended auctions where people get carried away by emotion and overpay by $200 – $300k and buy the most expensive house in the area. Not only will they have potential issues with finance, but should they wish to sell they will need to wait several years before being able to obtain that same price to avoid losing money
2. Review the legal documents
Buying a property is a legal transaction and when you purchase at auction the purchase is unconditional. This means that you are legally bound to purchase the property without conditions.
Each contract will have two parts which will be signed after a successful auction – a contract of sale and a section 32. The section 32 will set out certain information about the property itself. Your conveyancer or lawyer should review the documents prior to the auction to ensure everything is in order and there are no hidden surprises.
3. Know your budget and stick to it
Speak to your bank or mortgage broker to find out how much you can borrow and what your maximum budget is. This is important to know before the day of the auction.
Based on your research of suburb and your budget determine the maximum amount that you would pay for the property. Ensure that this is not a round figure – for example, stop at $633,000 instead of $630,000 as most people have a round figure and the extra $3,000 could be enough for you to secure the property.
Confidence goes a long way when you are bidding at an auction. It’s not always the person with the deepest pockets that walks away with the keys.
4. Arrive early and know your competition
Arrive at the open for inspection before the auction and survey the scene. Is it good weather and a large crowd? You can usually work out who are the serious buyers and who the onlookers are.
Knowing who your competition is will give you that extra confidence when it comes to the time to bid.
5. Bid confidently up to your budget
Auctions can be largely psychological so projecting confidence may give you the extra edge you need to secure the property.
When you do bid, bid confidently and assertively up until your budget and be prepared to walk away. If the property is looking like it will pass in, make sure you are the last bidder so that you have the first right to negotiate.
If you do not feel comfortable bidding you can always engage a professional Buyers Advocate to bid on your behalf.
Buying at an auction is a transparent process and confidence goes a long way. It’s not always the person with the deepest pockets that wins at an auction.
The Property Garden are Buyers Advocates and Feng Shui consultants and have over 20 years’ experience in the real estate industry. And yes we do have access to off-market properties. We take a holistic approach to assisting our buyers buy property in Melbourne, Australia.