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Preparing for an auction

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Following our Home Buying Seminar earlier in the year, there was a fair bit of interest in our tips to keep in mind when attending auctions so we thought we’d share them once again.

Auctions continue to be a popular way of selling a home but it’s important to keep a level head as things can move quickly. Being prepared is key. Here are some tips to keep in mind when it comes to preparing for and attending an auction:

  1. Have your loan ‘conditionally approved’ in writing. This means that your loan has been approved subject to one or a number of conditions, for instance it may be subject to a property valuation.
  2. Know and stick to your price limit – it is easy to get caught up in the auction hype on the day and pay more than you intend.
  3. Do your homework on similar properties/properties within the area you intend to buy in to avoid paying an inflated price at the auction.
  4. To familiarise yourself with the auction process, it is helpful to attend a number of other property auctions. This will help you feel in control and more relaxed on your auction day. It is also possible to make an offer on a property prior to the auction although the seller is not obliged to accept the offer or negotiate with you and may prefer to proceed with the auction.
  5. Obtain a copy of the contract (and relevant pest and building inspections, title searches and strata searches) ahead of the auction and have it checked by your solicitor or conveyancer.
  6. You will be required to register at the auction in order to bid so make sure you have the appropriate identification and if a trusted representative is bidding for you at the auction be sure to provide your representative with a letter authorising them to do so.
  7. Once the property reaches the reserve price (the price at which the seller agrees to sell the property), the auctioneer will say ‘the property is now on the market’. If a property fails to reach reserve price it is passed in and, usually, under the rules of auctions, the last highest bidder is given the first opportunity to negotiate directly with the seller.
  8. Immediately following the auction, the required deposit must be paid by the buyer (usually 5-10%, but can be negotiated).
  9. Please keep in mind that if you are the successful bidder, according to auction rules (these vary between states and territories), generally you have purchased the property as an auction in a public sale. If the sale does not proceed from this point you may lose your deposit.

If you are interested in a property that is being sold by auction, don’t be afraid to get on the phone to the listing agent to ask any questions you may have.

 

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