Buying at auction can be nerve-wracking if you’ve never done it before, (and it can be nerve-wracking even if you have!), but like everything which seems daunting, forearmed is forewarned!
First and foremost, you should know how an auction works. If you’ve never been to an auction before, go along to one; you don’t have to register your interest in buying, just attend and watch.
Here are our seven golden rules to help if you’re considering buying at auction:
Get your finance pre-approved
Having the finance pre-arranged is imperative when buying at auction. If you are the highest bidder, you usually need to pay the deposit there and then and provide the finance within a certain period of time. If you can’t raise the finance, you’ll forfeit your deposit, but there may be other terms and conditions meaning you’ll have to pay out more.
Do your homework
Talk to real estate agents and look at what prices for similar properties are going for. There are also online resources you can use for this too. These are only guides though. The property you are looking at may have additional benefits, such as a large acreage with the option of sub-dividing. This may mean the price maybe higher than other properties.
Alternatively, while you may love quirky additions, these may reduce capital gains later down the track.
While you’re looking at valuations of similar properties on the market, look to see how many are on the market too. If there are a lot, this could affect the price as buyers have a greater choice.
Consider all these aspects when deciding your highest bid.
Know the competition
As well as knowing what current valuations are, it’s also good to know the competition. Find out how much genuine interest there has been by asking the seller how many inspections have been carried out on the property. If there is a lot of interest, the chances are there will be some competitive bidding, and you may need to think your bidding strategy.
Get legal advice
Before you sign any documents or hand over any money, always take legal advice – it could save you thousands of dollars in the long run.
Pay for property inspections
As well as looking at the property yourself, get pest and building inspections done. You don’t want to pay for a property that’s infested with termites or has hidden major structural issues.
Your bidding strategy
Auctions can be a bit of a game in psychology, so dress like you mean business and call out your bids with confidence. Keep your highest price to yourself and some believe everything is in the timing.
Some believe in waiting until the last minute to be the final bidder, however they may run the risk of losing out if the gavel hits the block before the bid is placed. Others suggest bidding early, but don’t bid at your top price. That way you’ve room for manoeuvre if the bidding continues.
Don’t get carried away
No matter how much you want the property, do not get carried away in the excitement of the day. Know your upper limit and when to walk away. If you’re not successful with this property, put it down to experience and remain positive – another property more suitable for your needs and budget will always come onto the market.
We do more than simply sell and manage property, we’re here to give advice. If you’re thinking of selling your house at auction, or would like to know more about how an auction works and what it involves, our friendly team would love to help.
Over the 40 years we’ve been successfully operating in the area, we’ve helped thousands of people realise their real estate dreams and we are committed to delivering the best service and achieving the best possible results for our customers.
This is why we are one of Newcastle’s longest established property management companies. Give us a call on 02 4954 8833 or pop into our Cardiff office for a chat.