Buying property at an auction can be an intimidating process. Not only are you competing with other buyers on the spot, but there is also no cooling off period.
In a rising market, many properties are sold at auction, buyers that are interested in making a bid need to understand the processes involved so they are confident come auction day. Here are some of the things interested buyers should do before the auction to protect their interests and ensure that they are fully informed about the property they intend to buy.
Do your research:
Every buyer should thoroughly inspect the property before auction day to make sure all inclusions are in proper working order and that essentials such as gas, water and electricity are functioning properly.
It is also a good idea to study the area and surrounding suburbs of the property before the auction day, so you are confident with the amount you are prepared to pay. Consider surrounding features such as public transport, educational facilities and shopping centres, and geographical factors of the area such as surrounding noise and the aspect of the property. Having an understanding of what properties have recently sold and for how much can also help to inform your choice of home.
Get your finances in order:
Ensuring that you have adequate funds available to complete the purchase within the timeframe specified in the contract is one of the most important steps when preparing for auction. Those who plan to obtain mortgage finance should have their funding unconditionally approved (not just pre-approved). The seller will nominate a reserve price before an auction. If bidding continues beyond the reserve price during the auction, the property will be sold by the fall of the hammer. Be prepared with what your price limit is and when you need to step away. All bidders need to have a strategy for an auction and set themselves a maximum purchase price which they must stick to. Those who feel that they might become too emotionally attached to bid at an auction should organise to have someone bid on their behalf.
Successful bidders are required to pay a deposit on the property, usually 10 per cent of the purchase price, immediately following the signing of the contract. This means you will need to have a personal cheque, bank cheque or deposit bond to pay and exchange on the day.