Buying at auction can be a fast and effective means of securing your dream property but beware, it is not without danger.
With significant sums of money at stake and emotions running high, property auctions can be adrenalin-charged affairs. A good auctioneer will create a sense drama to proceedings to ensure that punters are primed and the bidding runs hot.
There’s a lot to be said for buying at auction. For starters, you can see exactly who you’re up against and what sums of cash other bidders are prepared to stump up. Auctions are also fast, which can be a big plus for buyers who are looking to move quickly.
There is also the chance that you could pick up a bargain.
But buying at auction is not without danger and unwitting buyers could find themselves in big trouble if they are not careful. The following pointers should help ensure that you can bid with confidence:
• Be approved – Make sure that your finance has been approved before attending an auction. This not only gives you a firm picture of what you have to spend, it also guarantees that you’ll be able to come up with the cash if your bid is accepted.
• Know your limit – It is essential that you set a maximum that you are prepared to spend before you start bidding. Actions can become heated and it’s easy to be swept up in a bidding war, resulting in parting with more money than you’ve bargained for. If the price goes above your max, pull the pin.
• Cash on the hip – Make sure that you’ve got a 10 per cent deposit that you can access on the day, as this will need to be paid once the deal is done.
• Consult a lawyer – Ensure that you understand all the legal implications and requirements of an auction purchase before you bid. Once you’ve agreed to buy at auction, there’s no turning back.
• Lie of the land – Never bid on a property that you’ve laid your eyes on only once. Make sure you inspect the property as many times as possible, and at different times of the day, to see how it is affected by sunlight and traffic.
• What’s it worth? – Make sure you have a clear picture of the property’s value before you go to an auction. Invest in an independent qualified valuer to get an appraisal of the property’s true worth before you place a bid.
• Befriend the agent – It is well worth getting to know the selling agent prior to auction to find out as much as possible about the auction process. While this may not result in getting a better price for the property, it will help show that you are a serious buyer.
• Provide the paperwork – Before bidding, you’ll need to register, and that requires producing certain identification. Make sure that you have your driver’s licence, and other appropriate documentation to validate your identity.