Aug 14, 2023 1:38:28 PM

Top Tips for Preparing to Buy Property at Auction

Topics: Auctions, First Home Buyer, Australia Mortgage Broker, Buying and selling 0

In Australia's competitive real estate market, auctions have become a popular method for buying property. Often fast-paced and intense, auctions are highly competitive which is why buying property at auction requires careful preparation. Whether you're a first home buyer, a seasoned investor, or somewhere in-between, our top tips will help you navigate the auction process with confidence and increase your chances of home ownership success.

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1. Do your homework

Before you even think about raising your bidder's paddle, thorough research is vital. Start by identifying your preferred locations and property types. Use online real estate platforms, attend open homes, and drive through neighbourhoods to get a feel for the local market.

Brush up your knowledge on market trends, recent sale prices, and median values in your desired area, as this information will help you to set a realistic budget and bid strategically, while avoiding overstretching yourself financially.

2. Get your finances in order

Buying property at auction is an unconditional sale, so getting pre-approved finance from a lender is not only important when it comes to understanding the maximum amount you can borrow, but also vital if you intend to bid at auction.

Pre-approval also strengthens your bargaining position and provides you with a clear budget to work within. Remember, that auction sales typically require a deposit of 10% upon winning the bid, so make sure you have the necessary funds readily available.

3. Set a clear budget and stick to it!

It's easy to get caught up in the excitement of an auction, but sticking to your budget is essential. Determine your absolute maximum bid and avoid going over that, even if the competition is fierce. Overstretching yourself financially could lead to post-purchase regret and financial strain.

4. Attend practice auctions

Going to a few practice auctions as an observer can help you become more comfortable with the process. Pay careful attention to how experienced bidders behave, the auctioneer's pace, and the overall atmosphere. This first-hand experience can help calm your nerves on auction day.

5. Engage professional help

Consider enlisting the services of professionals who specialise in property auctions, someone who can provide invaluable insights, help conduct due diligence, and represent your interests during bidding. It’s also recommended you seek legal advice before bidding to ensure you fully understand the terms and conditions of the sale.

6. Due diligence is key

Thoroughly inspect the property you intend to bid on, get building and pest inspections, review legal documents, and check zoning regulations. Completing your due diligence will ensure you make an informed decision about your purchase and help you avoid any unpleasant surprises after the sale.

7. Determine your bidding strategy

Auction dynamics can be unpredictable, so having a well-thought-out bidding strategy is essential. Decide when you'll start bidding, how you'll counter competing bids, and when you'll bow out if the price escalates beyond your budget. Going into the auction well-prepared will help keep focused on your home ownership goals.

8. Stay calm and confident

Auctions can be stressful, as the sale process often moves quickly and requires some agile thinking. On auction day, to help you remain composed and confident, arrive early, familiarise yourself with the surroundings, and be ready to act. Keep your body language confident, maintain eye contact with the auctioneer, and bid clearly to avoid any misunderstandings.

9. Bid strategically

Start with a strong bid that establishes your presence, and then bid incrementally in a manner that keeps your competition guessing. Bid with authority and decisiveness, and avoid emotional bidding while sticking to your pre-determined strategy.

10. Don't forget the extra costs

Remember that the final hammer price isn't the only cost, so be sure to factor in additional expenses such as stamp duty, legal fees, and potential renovation costs. Being financially prepared for these extras is crucial to ensuring a smooth transition into your new property.

Get auction-ready

Buying property at auction in Australia requires careful preparation, research, and strategy. By following these top tips, you'll be well-equipped to navigate the fast-paced auction environment and increase your chances of securing your ideal property.

For more advice around getting auction-ready and securing pre-approved finance, contact a Mortgage Express broker.

While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.

Finservice Pty Ltd (Mortgage Express) is authorised as a corporate credit representative (Corporate Credit Representative Number 397386) to engage in credit activities on behalf of BLSSA Pty Ltd (Australian Credit Licence number 391237) ACN 123 600 000 | Full member of MFAA | Member of Australian Financial Complaints Authority (AFCA) | Member of Choice Aggregation Services.