Buying At Auction
Buying a property at auction can be a daunting experience, especially for those who are new to the process. With homes that draw a lot of competition and big crowds on auction day, it can be easy to get swept up in the excitement.
Being well prepared prior to the auction and knowing what to expect on the day can help ease some nerves for those with their heart set on being the successful bidder.
Below we explain the process and how to prepare for buying a home at auction:
Before auction day:
- Do your research: By understanding what properties in the local area are selling for you will be better placed to have an idea as what the property will sell for on the day. You can find this information by researching recently sold properties on sites like allhomes.com.au or by speaking to real estate agents that specialise in the suburbs you are looking at purchasing in.
- Inspect the property: Make sure to attend at least one open for inspection on the property prior to auction day. This will allow you the opportunity to look through the property without the time pressure of an approaching auction, speak to the agent and request a copy of the sale documentation to read over.
- Organising your finances: It is advisable to make sure you have your finances arranged and approved prior to auction day, and that your deposit is ready to go. If you are the successful bidder, you will be obliged to pay the deposit on the day. This is commonly 10% of the purchase price, however it can differ from property to property. You can confirm the deposit amount required either by speaking to the agent or reviewing the contract of sale.
- Setting your limits: It’s important you have a clear idea of what you are willing to pay for the property prior to auction day.
On auction day:
- Getting registered: Unless you have done so earlier, when you arrive at the property on auction day you will need to register yourself as a bidder by providing the agents’ your name, address and telephone number. You will also be required to provide proof of ID, such as your driver’s licence or passport. Only registered bidders will be eligable to participate in the auction. Every state and territory have different regulations surrounding the auction process, so it is best to confirm the process with the agent before the day.
- Bidding paddle: Once registered, you will receive a bidding number (often in the form of a paddle) that you will need to clearly display each time you make an offer.
- The auction begins: At auction time, the auctioneer will present the property for sale by outlining the terms of the contract, as well as the state or territory’s applicable regulations. They will then invite bids from the audience.
- Holding the successful bid: If you are the highest bidder, you should be ready to pay the deposit as you are legally bound to purchase the property once the auction concludes. It is important to note that there are no cooling off periods.
- The reserve price: Prior to the auction the seller/s of the property and the agent will agree on and set a reserve price for the auction. This is the minimum figure that the seller will accept as the winning bid. This price is not disclosed to registered bidders. If the reserve price is not reached, there is still an advantage in being the highest bidder, as you will then have first right of negotiation with the vendor post the conclusion of the auction.