Get Ready To Bid At Auction

It’s interesting times for property buying (like it is for most things)!

Here are our top tips for buying at auction – Even if the auction you’re attending happens to be an online auction, the same principles apply.

Let’s envision it… You wake up in the morning, your mouth is dry and your mind is racing. You wonder why. Then you remember – it’s auction day! But are you ready?

Buying a property at auction can be like learning another language if you’ve never done it. It’s not uncommon to see first-timers being stung because they didn’t know what they didn’t know.

And currently the market is ‘crazy’ – there are too many buyers and not enough properties. It’s easy to bid far more than you intend to or buy a lemon that you can’t make lemonade out of because you didn’t do a few checks.

Stay calm and read these tips for buying at auction.

Get your finances in order

Don’t bid if you don’t know how much you can spend. It sounds obvious, right??Yet auctions are full of people with paddles in the air (or virtual paddles on screen) and only a vague idea of what they can afford.

Speak to your mortgage broker, financial advisor or bank to lock down your finance approval before the auction. Then you’ll know exactly how much you can spend.

Ensuring your finance approval is in place before the auction will make sure that your finance won’t fall through after the auction, which could result in you losing your deposit and a bucket load of trouble falling on your head.

Visit the property

This one is tough during these times, however open-homes are still happening in slightly different forms.

Check that everything is in good working order (ahead of your inspections reports – see below).

Also drive past the property at various times to scope out the traffic, night-lighting and other aspects that could make the property unworkable (like noises from overhead aeroplanes, neighbours or children with recorders).

Get inspections and information

If you realise after the auction that the property is inhabited by a termite army, you still have to buy it. Find out the state of the property?before?the auction.

Yes, it’s more money you have to spend, but it’s better than the property falling down around your ears. At a minimum, get a building and pest inspection report or a strata inspection report.

You can also get an electrical report and plumbing report – this is particularly advisable if the property is old.

Some people may get an independent valuation to confirm what the house is worth, and research the area and other sales in the neighbourhood.

Use this information to decide whether to buy it, lower your bid or just avoid the property altogether. Don’t be emotional – there will always be other properties out there!

Check the sale contract and seek legal advice

Ask the agent for a copy of the sale contract and send the contract to your solicitor.

Your solicitor can spot potholes before you hit them and recommend changes to make the contract more favourable to you.

A good solicitor will review the contract in detail, provide you with a letter of advice, summarising the important points and prepare an email to the vendor’s lawyer to request changes to the contract.

All contract changes should be finalised before auction day.

In a private sale, you may be able to negotiate a cooling off period after exchange of contracts.

But this isn’t the case for an auction –?there’s no cooling-off period. So you need to do all due diligence and have your solicitor negotiate the contract variations before the auction.

Get ready to bid

With this information in your hot little hands, you’re almost ready to bid. Just a few more things to note:

Know your limit?– Determine your spending limit before the auction. If you don’t trust yourself (and you shouldn’t!), bring someone who will practise some tough love on you. Or consider engaging a buyer’s advocate to bid on your behalf.

Register to bid?– You can’t just roll in off the street and bid on a property. You need to register first or authorise someone else to bid for you. You can do this before the auction, usually at a table on site.

Have your deposit ready?– You’ll need to throw down that deposit once you’re the last one standing, so find out how to pay it and get it ready. The agent can tell you what the payment methods are.

Get professional advice

This is probably the biggest purchase you’ll ever make and, if you haven’t been to law school, it’s a pretty steep learning curve. Always get independent legal and financial advice before you jump in.

If you need some good advice, contact one of our brokers and we can put you in touch with an amazing team!

Happy bidding!

Chris Booth

CEO, Lydian Finance