The process of buying a home can be stressful, and an auction process can seem quite daunting… but it doesn’t have to be! Auctions are often a common rite of passage to owning your first home, going into it prepared with forethought and strategy can help maximise your chances of success (without having to pay too much).
If this is your first home buying experience, we’ve got 10 tips for you to help you on your journey to acing your first auction, not missing out or paying too much and getting that dream home!
1. Do your homework.
When preparing for a real estate auction, research is key! Here are a few things you can do:
- Take a look online at recently sold listings in the area so you can better understand the prices at which similar properties have sold for.
- Walk around the neighbourhood and if you have the opportunity, speak to some of the neighbours about the area.
- Attend other open homes for nearby properties.
These sorts of activities can help you better understand the home's location and market value and assist in deciding a suitable bidding range for the auction.
2. Obtain a professional building report.
It's important to fully understand the condition of the property and what you’re bidding on, so getting a thorough onsite inspection of the property as well as obtaining a professional building report is a must. If the building report doesn’t come back as favourable, you’ll be able to walk away before the bidding begins. Alternatively, you could use this information to set a lower bidding limit.
3. Set a budget.
Establish a clear budget before stepping into the auction. Remember, you need to consider more than just the bidding price. There are additional expenses such as stamp duty, conveyancing costs, furnishings and any renovations that need to be taken into account. It’s very easy to get over-excited at an auction, so it’s key that you set a maximum bid amount that aligns with your financial capabilities … and stick to it.
4. Apply for financing pre-approval and pull your deposit together.
Pre-approval for a home loan is a type of preliminary approval from a lender. Before you start bidding at an auction, you need to approach your lender to get pre-approved for a loan so that you can be confident in knowing you have finance to pay for your new home should you become the successful bidder. This will show you how much you can comfortably afford based on your income and expenditure.
You will also need to ensure you have your deposit saved and ready to transfer if you are the winning bidder at the auction.
Get fast pre-approval with Horizon’s quick loan application turnarounds! Enquire with your local lender now.
5. Understand the auction process.
Auctions are typically carried out by a real-estate agent, who will act as the auctioneer, and are subject to strict rules. Before an auction, the seller of the property will nominate a reserve price, this is not usually made public. During the auction the hopeful buyers will compete to put in the highest bid for the property. Auctions are fast paced so it’s important to make sure you’re keeping track of the competing bids being placed and stick to your budget. If the reserve price is met and bidding continues, the home will be sold at the end of the auction however, if the bidders don’t reach the reserve price the auctioneer might ‘pass in’ the property, which means it is not sold.
Another important piece of information you need to consider before diving into an auction is that if you are the successful bidder, there is no cooling off period or time to change your mind about the sale.
6. Familiarise yourself with the auction rules.
As mentioned above, some auctions will have specific rules or procedures. Things such as requirements for registration, bidding increments and payment methods.
Make sure you get a copy of the auctions terms & conditions to review, that way you can be prepared to follow the rules.
7. Thoroughly examine the sale contract.
In order to protect yourself against any potential risks that come with buying the property, obtain a copy of the sale contract and show it to your solicitor or conveyancer for review prior to the auction. They can review the contract and explain any risks that may come with purchasing the property.
8. Attend other auctions as an observer.
If you want to try to understand the dynamics and pace of an auction process, it’s a good idea to attend some auctions just to observe. This will help you get a feel for the auction process before you go in as a bidder.
9. Bid strategically.
There are a few tailored bidding tactics that you can use to maximise your chances of success at an auction, such as establishing dominance by bidding early, bidding incrementally so you can scope out the competition or waiting until the last minute to jump in with a decisive bid. You may need to adapt your strategy based on the behaviour of the other bidders or the dynamics of an auction on the day.
10. Enjoy the experience.
Although it’s important to be prepared, strategic and level-headed at an auction, you should also try to enjoy the experience! Auctions are exhilarating and whether you win or lose, each time you participate in an auction you will gain valuable insights and lessons for the next time. Every bid you make brings you closer to owning your own home or investment property! Celebrate your successes and learn from your mistakes. We know you’ll get there!
Although it can seem daunting participating in your first auction, it can also be an exhilarating and rewarding experience as long as you go in with the right mindset and preparation.
It’s important to remember that success at an auction isn’t just about winning, it’s about securing the right home at the right price and time for you.
By following the tips above and doing all the right preparation, setting your budget, staying calm under pressure, and observing auction protocol, you’ll be on the path to acing your first auction! These strategies will enhance your chances of success.
As you step into the world of auctions, remember that financial readiness is critical. Horizon Bank ensures you have all the financial support and advice you need to make confident bids. Whether you're looking into securing a loan for that must-have item or seeking advice on managing your finances post-auction, our team at Horizon Bank is ready to assist you. Don't let financial uncertainties hold you back from acing your first auction.
Visit us online or drop by your nearest branch to discover how we can help you make your auction experience seamless and financially sound. Let Horizon Bank be your partner in navigating the exciting world of auctions. Start your journey with us today!
Horizon Bank has a branch network spanning the NSW South Coast and Illawarra. Horizon Bank branch locations: Albion Park, Bega, Bermagui, Berry, Merimbula, Moruya, Nowra, Thirroul, Ulladulla & Wollongong.
