5 ways to overcome your fear of auctions

Many young people are missing out on the opportunity to purchase their dream home because they’re too scared to participate in auctions. Here are five tips on how Gen Ys can overcome their fears and get in the auction action!

Adam Flynn

A recent study by finder.com.au found that one in five Aussies are fearful of the auction process, with 27 per cent of Gen Y buyers being the most hesitant. As CEO at Biggin & Scott Knox, an experienced auctioneer and a property investor myself, these figures left me scratching my head as some of the best properties on the market come up for auction. If you’re really serious about finding an investment property or dream home, then why limit your search?

Chances are, if you’re on the hunt for a house you’re going to come across a lot going under the hammer. Buyers who refrain from stepping outside of their comfort zone and embracing the process start at a disadvantage and can miss out on getting their foot on the property ladder sooner.

The benefits of auction

It might seem daunting but buying at auction can actually be a great way to purchase with plenty of benefits. It’s a quick and simple process. It often takes less than four weeks from doing your research to winning the bid and signing the papers. When you go to auction, you know you can buy your house that day, without further negotiations drawing out the process. Auctions also offer a lot of transparency, and the chance of a bargain if the seller needs an urgent sale.

Yes, entering the bidding war can be terrifying if you lack the experience, but there are a few things you can do to get prepared:


1. Do your homework

Research the auctioning process to understand what’s happening beforehand. Visit other auctions to see how they play out and figure out the different bidding strategies. Make sure you inspect a lot of properties and see what price they sell for. You can ask the real estate agent for comparable sales in the area to help you gauge recent values better.

2. Pre-auction sales

Always go in with an open mind. Although it may be scheduled for auction, many vendors will sell before auction. The fact a property is scheduled for auction doesn’t mean you can’t buy it with a private treaty pre-auction. Some vendors actually have the same fears as buyers and simply don’t want to go to auction and will be happy to avoid it if possible.

3. Get someone to bid for you

If you think adrenaline or fear will get the better of you, why not get someone to bid on your behalf? If you have a trusted friend or family member who has had previous experience with auctions, employ their help. Buyer’s agents are licensed professionals who do the legwork for you, however they charge a fee for their service. Organise this prior to auction day as there is paperwork involved with having someone else representing you.

4. Stick to your budget

Buying a property is an emotional decision, especially for a principal place of residence, however try to stay somewhat unattached to the property. Limit your budget to what you're prepared to go up to and stick to it. This way you will avoid dealing with after-purchase anxiety. Your walkaway price should be what the bank is willing to loan you plus your deposit. Getting pre-approval is the best course of action before even visiting the auction as if you are the winning bidder – you need a 10 per cent deposit ready to go.

5. Post-auction buys

As the market tightens up and clearance rates are lowering, more properties will pass in at auction. This means you could be in a position to buy a property post-auction and attach any conditions you want to the contract. It would be naive to assume that all properties are going to sell under the hammer. Don’t miss out on a good buy because you’re scared of the auction process. Just make sure you place a bid at auction time so you get first dibs on post-auction negotiations.

Embracing the fear

Auctioneering isn’t going anywhere. With the advent of online auction bidding on the horizons, it’s likely to gain in popularity rather than reduce. By sitting back and letting more experienced bidders set the pace, you’re limiting yourself to only a slice of the market. Don’t be intimidated by the auction process – use it to your advantage and open up the possibilities.

As long as you leave the emotion behind and go in with a clear vision of what you want and where your limit is, you won’t overspend. Do your due diligence and you could end up with the perfect property for your portfolio or a place to call home. Who knows, you might even enjoy the ride!

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