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, and buyers interested in making a bid need to understand the processes involved so they can bid confidently on 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.
Interested buyers should consult professional advice regarding the contract of sale to recognise any risks and protect their interests by identifying any terms that might need to be negotiated or altered.
Inspect the property
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.
Research the area
It is always 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.
One of the most important aspects of preparing for a sale is ensuring that you have adequate funds available to complete the purchase within the timeframe specified in the contract. Those who plan to obtain mortgage finance should have their funding unconditionally approved (not just pre-approved).
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.
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.
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.