We understand buying a home can be daunting and throwing an auction into the equation can make it even more overwhelming. The good news is that if you're well-prepared and succeed at auction, you'll be walking away a very proud homeowner. Discover our auction tips below to guide you along the way.
Get your home loan approved
If you’re planning to bid at an auction, it’s important to have your finances sorted. It’s a legal requirement to pay the deposit on the day if your offer is accepted, so finance is crucial. The deposit is normally 10% but this may vary depending on any prior negotiations, so be prepared.
If you need any assistance with your home loan, we’re here to help. If you’re looking for your first home or your next home to live in, our owner occupied home loans have got you covered. Alternatively, if you’re looking to invest, or build your current investment portfolio, we have a wide range of investment home loans to suit you too.
Do your research
It’s important to get prepared and feel confident before jumping into an auction.
Check out these important tips to get you started:
- Consider what you want in a property - things such as public transport, educational facilities and local shopping centres. Also, don’t forget other factors such as surrounding noise, natural geographic boundaries such as rivers, lakes, flood zones, bushfire zones etc.
- If you’re considering a unit, do research into the body corporate. If you’re looking at houses, consider the land size and age of the property.
- Make sure to research the requirements for your relevant state or territory as each state has different rules and regulations at auction.
- Take the time to see what properties are available, what's recently sold and for what price.
- Visit other auctions in the area to familiarise yourself with auction jargon and the overall process from start to finish.
Before auction day
The most important thing to do is to take the contract of sale to your solicitor or conveyancer well before the auction date. This is to make sure you're aware of any risks and ensure that if you are successful at auction – you can sign your contract with confidence. Additionally, it’s important to arrange any building and pest inspections for the property so you know exactly what you're buying.
Make sure you organise a final inspection prior to auction day. There is no going back once you bid at auction, so it’s extremely important to be certain. Make sure all inclusions such as gas, water and electricity are all functioning properly as the sale will be final if you're successful on the day.
On auction day
It’s important to arrive at an auction early to give yourself time to register. This will help you to be prepared and ready to bid when the auction commences. You must have a driver’s license or passport on-hand to register as a bidder. Most auctioneers will give you a bidder's guide so you know what terms you are bidding under. Your bidding card is also important as the auctioneer will need to cite this in order to accept your offer.
Set your game plan
Know when you’d like to start bidding, what the sale price is likely or expected to be, and what your price limit is. It’s beneficial to stay confident and make strong, decisive bids. For example, if bidders are raising their offers by $1,000 increments, you might want to consider increasing your bid by $5,000. Strong bids can intimidate other bidders, and shut down an auction sooner rather than later.
Set yourself a limit
You should only bid what you can afford and not exceed this. It’s also important to stay level-headed and to avoid bidding beyond what you perceive the property to be worth. At the end of the day, there will always be more properties.
If your bid is successful and you have secured the property, contracts will need to be signed immediately and a deposit will need to be paid. This may be done by a funds transfer or bank cheque. Ask the real estate agent in advance about what they’ll accept. Standard settlement periods are usually 42 days, however this can be varied to 60 or 90 days depending on the vendor’s circumstances. Having been successful at auction it’s important to get on top of any home loan conditions you have so you can start planning your move, or tenancy. Be sure to contact us to discuss any loan conditions you may be unsure of.