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Buying at auction can be fun. Here are some tips to help you make the home buying process more enjoyable.
At the start of every year we have few properties on the market being auctioned. This is driven by holidays and the fact that most real estate agents prefer four week marketing campaigns. By mid to late February the auction market tends to heat up as agents purse their targets and home owners try to get off to a quick start for the year.
While auctions can be an emotional cauldron, your mortgage broker What If We Finance believes if you apply a disciplined approach you can make it more enjoyable. So what you should allow for:
- Ensure you review the contract before the auction and any amendments are agreed prior to auction. These amendments do not apply to different bidders so you may be bidding on different conditions or terms.
- Get your finance in order. Buying a property at auction is unconditional so ensure you have a pre-approval and you are obliged to buy the property if the lender withdraws finance or the valuation falls short. Your mortgage broker What If We Finance can help you here.
- Understand auction rules and what the difference between a vendor bid is and the reserve price. Also note that a reserve price can change during the auction.
- Carry a cheque book with you because if you win you are expected to pays a deposit.
- Attend at least 5 -10 auctions and watch the style of auctioneer and the role of the participants. You need to get comfortable with the auction process so you do not get “sucked in” by the agent’s hype and dazzle dazzle and focus on the facts.
- Set the maximum price you will pay for the house or property and this is your final price or walk away price. Do not deviate from it. Auctions can be emotional affairs and with the pressure you can easily pay alot more so stick to your guns.
- Time your bidding and have a bidding strategy and do not bid too soon.The most important rule at an auction is NEVER BID UNTIL THE PROPERTY REACHES RESERVE. Until then, it is not for sale and it makes no sense to bid on anything that is not for sale.
- The reserve price is the lowest price the agents have persuaded the seller to sell the property for. This is what favours you because you will know when the property is on the market and when to bid.
- Never disclose your maximum price under any circumstances. The agent is there to extract the maximum price for the seller and if they know your maximum price you lose your strategic advantage.
While auctions can appear to be a “dog eat dog” affair a disciplined approach and strategy will work in your favour. Do not get too emotionally involved and you will be pleased with results you can achieve.