Bidding to Win: How to Master The Auction Process When Buying a Property

Attending an auction can be an overwhelming experience.

With so much pressure to make the right decisions, it's easy to get caught up in the excitement and lose sight of your goals.

However, with careful planning and preparation, buying a home at auction can be a rewarding and successful experience.

Whether you're new to auctions or an experienced investor, in this week's update, I'll share some ideas to help you navigate the competitive world of property auctions with confidence.

Understanding Your Finances When it Comes to Auctions

It's important to have your finances in order before attending an auction, as auctions are unconditional.

One of the most important things you need to do is to get pre-approved for finance.

This will give you confidence in how much you can spend and what your monthly repayments will be like.

As not all banks are created equal, it's best to talk to a Mortgage Adviser to make sure you have maximised your borrowing power so you are in the best possible position to buy on the day.

Even if you've already secured pre-approved lending, it's important to make sure you get the property “signed off” by the Lender before auction day, just to make sure they are comfortable to take on that particular property as security.

Setting your Maximum budget (and sticking to it).

Setting your maximum budget is another one of the most important things you need to do before attending an auction.

Your budget should be the absolute maximum amount you can afford to pay for the property, taking into account your pre-approved mortgage, the deposit you have saved and any other costs associated with the purchase.

When setting your maximum budget, it's important to be realistic as it’s very easy to get caught up in the emotion and excitement on auction day.

Getting to know how much each step up in your bidding will cost you each week, can help determine how high you are willing to go on a property.

The table below shows how much your weekly repayments could change with additional bid amounts.

Understanding the Auction Contract

Before bidding at an auction, take time to read and understand the auction contract beforehand and ideally have your solicitor look over it.

The auction contract is a legal document that sets out the terms and conditions of the sale.

Some of the things you should look out for in the auction contract include the deposit amount, settlement period, and any special conditions.

If you wish to alter the agreement or impose any conditions on the sale, such as a reduced deposit amount or change in settlement date you must arrange this before the auction with a document known as a variation of agreement.

Any proposed changes should be discussed with the Real Estate Agent and your solicitor . The vendor (person selling the property) will then decide whether they are willing to accept your proposed changes or conditions.

Tips for Bidding at Auction

Bidding at an auction can be an exciting but nerve-wracking experience. Here are some tips to help you bid with confidence and success:

• You will need to register to bid at the auction. Make sure you do this before or on the day and bring your ID.
• Arrive early at the auction to get a good seat and to familiarise yourself with the Real Estate agents in the room as well as the Auctioneer.
• Don't be afraid to start the bidding. Starting the bidding can give you an advantage and show the other bidders that you are serious.
• Bid with confidence and authority. Use a clear and loud voice when bidding.
• Watch the other bidders closely. This will give you an idea of their bidding style and how much they are willing to pay.
• Don't get caught up in the excitement of the auction. Set your maximum budget before attending and stick to it no matter what happens during the auction.

Winning The Auction - What Happens Next?

Congratulations! If you are the successful bidder at an auction, you will be required to sign the auction contract and pay the deposit then and there, so make sure you have your deposit money available to transfer.

This is where working with a Mortgage Adviser throughout the process can really help to make sure you have these things covered so you aren't caught short on the day. Feel free to reach out if you need a hand getting “Auction Ready”!

Michelle ? 027 232 1542