Being prepared to buy a property at auction well before the big day is very important so you can bid with confidence.
Auctions can provide you with a terrific opportunity to purchase your dream home in a transparent negotiating process. Understanding the requirements of each stage and what options you have will increase your ability to bid confidently.
We encourage interested buyers to meet with the agent in the lead up to the auction. It is great getting one on one with people, particularly if you have questions you want to ask before auction day. Your agent can arrange a private appointment to assist with further inspections of the property, answer questions on finance, the buying process or the overall auction experience. If you are still unsure about the process on the day, your agent can sit down with you, have a discussion and walk you through different scenarios and how you might manage them.
It might even be an idea to register early, which means there is one less thing to do on the day. It also allows you to be discreet, ask any final questions of your agent, and increase your chances of going unnoticed as a registered bidder.
Transparency and honesty are paramount to auctions. Which is why we provide you with as much information as possible for both legal and ethical reasons. It is unfair to you as a buyer if an agent is not honest with you, as it will not give you the great experience you deserve.
Being prepared with your finance
There are often situations with auctions where the buyer attends and participates in the bidding thinking the property will sell for a lower amount than recent sales suggest. Commonly, the property ends up selling for a significantly higher amount. Seller motivation can often mean that the reserve price will be lower than market values suggest. Don't overlook the opportunity for a bargain, but also consider what the value of the property is to you. If you like the home, arrange finance for a price you are willing to pay, so if the price goes higher than initially expected, you can still remain a genuine contender to buy the property.
Actual value and perceived value can be quite different, depending on variables in the market, and can often drive up the bid price at auction. Come prepared to pay a deposit based on the maximum price you are prepared to pay.
It is important that you are as informed as you can be before the auction. You don’t have a crystal ball and can’t predict what the property will sell for, but you can do your research and with your agent's help you can be as prepared as possible going in.
Alternatively you can make an agreement for a part deposit prior to auction and if during the bidding process the price goes over your deposit amount, you can ask the agent during the auction if the seller would agree to a part deposit. It may also be possible to negotiate variations in the settlement conditions in the contract and this should always be confirmed with the agent prior to auction day.
Offer before auction day
In some cases sellers may consider offers prior to auction. After inspecting the property, it is advisable to tell the agent of your interest. This ensures you will be advised of any pre-auction day offers made by other prospective buyers.
You need to be aware that any offer of this nature is made under auction conditions and requires full conditional finance approval. If such an offer is accepted, it will require an immediate unconditional exchange of contracts prior to the property being taken off the market.
Strategies to use on auction day
Being successful is about planning and preparation and having a conversation with your partner, family or a third party about how much you are prepared to pay. Ensure you decide on this before the day. However, you might want to consider being a little flexible. Would you really let the property slip away if the price is only $1000 over your limit?
1. Arrive early and get comfortable. Try to identify other bidders – or get a friend or relative to do this.
2. Register as a bidder in accordance with the Civil Law (Sale of Residential Property) Act 2003. To do this you will need proof of identity in an approved form displaying your name & address. Photo ID is required (e.g. current driver’s licence or passport).
3. If someone is bidding on your behalf, they will need a copy of your photo ID and a signed written authority from you to do so, in addition to their own photo ID. If you are the successful bidder the auctioneer may want to confirm your winning bid before selling you the property.
4. Once you have registered you will be allocated a card with a bidder’s number. You will need to clearly display this bidding number every time you bid. You may choose to announce the amount you are bidding or nod to the auctioneer when agreeing to the nominated bidding amount.
5. Make your bids clearly and confidently. Set yourself an upper limit, but also factor in any personal value the property may hold for you. What value do you place on owning the property? Are there benefits such as views or location that hold personal value to you?
Most auctioneers will often make a final-sounding declaration like “first call, second call, third and final call, all silent” – and then stop, disappear into the house to seek final instructions from the seller and re-emerge moments later to restart the auction.
If you would like to know more about the auction process download our ebook - The Ultimate Auction Experience here: http://www.peterblackshaw.com.au/auctionexperience.html