Every week, there are thousands of properties that are auctioned all around Australia. With numerous selections to choose from, one would think that it is a great opportunity in scoring a property that is within preference and budget – unfortunately, this is not always the case.
Not everyone is happy at these auctions. Some loses at the bid while others experience buyer’s remorse. Usually, such buyers are those that do not come prepared. Let us remember that there are other people who also wanted the same thing – a great property at a reasonable price.
Bidding and purchasing at property auctions in Australia is a serious matter and must be done correctly with the proper preparations. There are two main factors to consider which we will discuss individually:
>>Pre-Auction things to do
>>Actual Auction day preparations
Preparing before auction day –
Think of auction day as a battle to achieve a highly coveted prize (the property). Buyers are contenders that are willing to spend huge amount of cash. Because of this, it would be a great idea to be one step ahead by considering the following points:
>>Determine the reserve price
>>Actual inspection of the property
>>Choose an excellent conveyancing solicitor
>>Making an early move (pre-bidding)
First and second bullets are a common tandem. The reserve price is the amount that the seller wants – he / she would never accept anything below this price. If all bids do not reach the reserve price, it would be a case of what we call “passed in”. The seller may re-list the property or in rare cases negotiate a consensus some bidders (usually the ones whose offer is nearest at the reserve price)
After knowing the reserve price, it is imperative to check the physical property if it is worth the asking cost. Check the building for any sign of cracks or damage, pests, paint, etc…
If the property is worth a comfortable bid, it is time to look for a reliable conveyancing solicitor to handle intricate aspects like condition reports and contract checking.
In most cases, a copy of the property contract is provided by the seller’s agent. The conveyancing solicitor will check the contract for details (such as penalty interest dates, settlement dates, etc…) then discuss it with the buyer. There are certain cases wherein the buyer may want to modify some terms of the contract – don’t be shy to bring this up as the seller may agree to it.
Lastly, some sellers accept bids even before auction day. But of course, this should be an amount that is attracting to the seller. Also, before doing any bid, be sure to check financial aspects.
Apply for loans and have sufficient funds ready as bid winners are required to make deposits on auction day.
During auction day –
Pre-auction preparations are just half of the journey in acquiring that dream property. The auction itself is a different story.
Below are the common steps on how property auctions go:
- Buyers (bidders) will have to register to participate
- The auctioneer will give important need to know information like state laws, other relevant info about the property, and the starting bid.
- Bidders will now have the chance to shout out their bids
Property auctions can happen real fast and can be quite intimidating for first time bidders. This is the reason why it would be advisable to attend other earlier auctions (if there are any). This is to get a glimpse or feel of an actual auction. This is also a good way to observe bidding tactics of other buyers.
The auction will end when a bid matches or is higher than the reserve price. The winner will have to:
- Sign the contract
- Pay the deposit (normally 10% of the buying price)
Once the two items above are completed, the auction is officially complete. FYI please that the remaining balance must be completed on settlement date which is normally between 30 to 90 days after auction day.
Additional tips and reminders during auction day:
>>Properties purchased at auctions are commonly negotiated or agreed to not having a cooling period. The conveyancing solicitor usually informs the buyer of this information as it is most likely indicated on the contract.
>>Wait for a good opportunity to place a bid. Remember to observe first before making a bid.
>>Put a ceiling price. Don’t bid an amount that you are not comfortable with as you may suffer buyer’s remorse.
>>If the final bid is only a few hundred bucks above your amount limit, try to bid some more. Don’t lose that dream home just because of a few hundred bucks. But again, know and remember your limit and the price you are comfortable with.
That’s just about it. Property auction is a great way to secure that dream house. Remember the tips indicated here, choose a good conveyancing solicitor, and find the nearest property auction in your area.