Buying property by auction
Your heart's pumping. The excitement, pace and outcome of a property auction is about as close as you can get to having an adrenalin rush in the world of Real Estate. By buying at auction you could find the perfect property for you - and be sure you bought it at today's true market value.
hoamz has an experienced and highly respected auctioneering team that will provide step-by-step advice, marketing and management of every aspect of a property auction.
Buying at auction is a relatively simple process, with many advantages for the buyer as well as for the seller. However, it’s not simply a matter of turning up on the day and catching the auctioneer’s eye. You need to do your homework so that you know your rights and obligations, and so that you feel comfortable bidding on the day.
To help you better understand how auctions work, we’ve put together a list of key things you’ll need to do before you raise your hand on auction day:
Register your interest. You must let the real estate agent know if you are interested in buying the property. That way, if another buyer makes an offer before the auction, the agent will be able to contact you.
Arrange finance. This is very important. Buying at auction is unconditional – there is no ‘subject to finance’ clause – so you must be sure you are able to fully finance the home if you are the successful bidder. Most lenders will pre-approve your bid, up to a certain price. If you are the successful bidder you will also need to pay a deposit (usually 10% of the sale price) on the day of the auction.
Read the contract. The ‘Particulars and Conditions of Sale’ is the contract signed by the seller and the successful bidder. It contains a legal description of the property, a list of chattels, terms of settlement and the possession date. Obtain a copy before the auction and get your lawyer to check it for you.
Make any changes. If the terms of the contract don’t suit you, you may be able to change them. For example, you may be able to extend the possession date or pay a lesser deposit. You must let the real estate agent know before the auction, and obtain the seller’s agreement in writing.
Carry out all checks. The onus is on you, the buyer, to ensure that all checks have been carried out before the auction day. This includes LIM reports, builder’s and engineer’s inspections, valuation, etc.
Know the value. If you have been studying the market, you may have a good idea of what the property is worth. If you need help, your real estate agent can refer you to similar homes which have sold recently that are a good comparison. Otherwise you could arrange for a valuation.
Know the process. Talk to the real estate agent about exactly what will happen on the day. You may like to attend a few other auctions before bidding yourself, to familiarise yourself with the process.
Once you’ve done all the groundwork, you can get ready to bid with confidence and enjoy the excitement of auction day.
Why buy property at auction?
It’s quick – you avoid lengthy rounds of offer and counter-offer encountered in sale by negotiation.
It’s open – you know exactly what other offers are being made – there is no second guessing.
It’s serious – selling at auction generally indicates that the owner is ‘motivated’ to sell. He or she may have a specific deadline to meet.
The auction process
Below are some hints to help you feel more comfortable with how the bidding process works:
1) Feel free to start the bidding where you choose - making the initial bid can be difficult, but our auctioneer is trained in the process and understands where the bidding increments should be at every stage of the auction.
2) If you’re not in a position to start the bidding, make sure you come into it at a level when the figure is within your price range. It always pays to have a little room to manoeuvre, rather than waiting until you’re close to your limit.
3) Make your bids confident and clear - not only do other buyers realise that you’re serious about bidding, but it pays to ensure there is no chance the auctioneer can miss a last-minute bid. Try to keep the bidding spirited rather than hesitating, which can indicate to other bidders that you are close to your limit.
4) Understand that the auctioneer will ‘call’ the property three times as he or she is about to close the bidding. This is a clear signal to ensure you’ve put your best foot forward and are comfortable with the level of the bidding and the course of the auction.