With property analysts tipping this summer as the hottest auction season on record, many inexperienced buyers may find themselves bidding at auction who are unaware of the process.
Blogger: Jacque Parker, director, House Search Australia
Buying a house at auction can be both exciting and stressful but by planning ahead, doing your research, conducting due diligence and knowing your budget can help reduce anxiety.
Using a buyer’s agent is obviously the best way to navigate the process from start to finish. We can help provide useful guidance before and during the auction and relieve much of the stress and uncertainty involved.
Here are REBAA’s tips for buyers looking to purchase property this summer auction season:
1. Research comparable sales in the neighbourhood
Compare recent sales prices of similar houses in the area to help you decide on your budget. In order to properly understand the market in your preferred suburb, it is recommended that you inspect as many comparable properties as possible up to three months before the auction. You can also research recent sales via the internet through real estate websites like www.realestate.com.au www.domain.com.au and www.onthehouse.com.au
For specific sold prices, if unadvertised, it is best to verify these directly with the selling agents. There are also numerous property sales data reports available to supplement your research, from companies such as RP Data, Residex and APM (Australian Property Monitors) for an affordable cost. Local knowledge is key to ensuring you don’t overpay.
2. Have a strategy
Make sure you have an auction strategy to determine when you start bidding, how frequently and when you will stop. Attend a few auctions to get a feel for the atmosphere, build confidence and be aware of how they operate. Take along a friend or third party to ensure you stick to your limit, and as another set of “ears and eyes”.
3. Know yourself
Even if you have a strategy, it’s good to have an ‘exit strategy’. If you are likely to get carried away during the auction and possibly bid above your budget, be prepared to leave the auction location immediately you reach your top price. You can always find out how much the property sold for later.
4. Know your budget
This is the maximum amount of money you are willing to spend on a home. Making a “walkaway price” is essential before bidding, to ensure you remain calm and focussed. Under no circumstances exceed your budget.
5. Due diligence
If you happen to be the successful purchaser at auction and you haven’t had your contracts checked by a solicitor in advance, building inspections completed and finance confirmed, then you could be in for some serious problems.
6. Take out the emotion – hire a professional
Auctions are highly emotive. They are based on competition and driving the price up in a competitive environment. Spending money on a professional buyer’s agent can save you tens of thousands by keeping you grounded and your budget top of mind. As professional bidders, who are used to the environment and likely scenarios, they can greatly assist at what can often be the most expensive purchase of one’s life.