Tips for Buying a Home at Auction
You’ve found your dream home. It ticks all the boxes, you can see yourself living there for years to come and you’re ready to put in an offer. But hold on… it’s getting sold by auction! That’s a bit scary… don’t stress, we’ve got you covered. Here’s our tips on buying a home at auction successfully:
Go to a couple of auctions beforehand.
Auctions are a fast paced, emotive environment. You need to know what to expect, or you could get sept up in the drama of it all and end up making higher than intended bids. You can also watch how other people go about their bidding and decide which of their strategies to adopt.
Do your research on the property.
Do some thorough research on the property to get an idea of how much it should sell for. Check out similar homes in the area and what they sold for. You need to have a solid understanding of what the house is worth so you don’t end up spending too much for it.
Get pre-approval on your finance.
Most of us need to borrow money to buy a property. When you go to an auction, it’s good to know how much money you’re able to spend. Remember, when the hammer goes down and you’re the highest bidder, you’re legally obligated to buy the property, provided the reserve price has been met.
Have a reserve of your own.
The property vendor will have set a reserve price. This means, if the bidding falls short of the reserve, the sale falls through. You need to come up with your own reserve price, that you absolutely won’t go over. Stick to this at all costs!
Make a pre-auction offer.
Did you know that you don’t have to wait until auction day to put an offer in? If you really like the home, approach the selling agent and make an offer. Many homes sell this way, and it might just save you the trouble of going through an auction.
Play your cards close to your chest.
Don’t let on to the selling agent, the auctioneer or the other bidders what your limit is. Just keep your cards close to your chest and bid confidently. Don’t get carried away and remember your limits.
Ensure you have the first right of refusal if the property reserve isn’t met
If the vendors reserve isn’t met at auction, this usually means the property will pass in and be offered to the public, but first it is offered to the bidder who has placed the last highest offer. Be that bidder, so that you have the first right to negotiate with the vendor post auction.
Don’t despair.
If the house sells for more than you can afford, it’s not the end of the world. There are other homes out there, it wasn’t meant to be. And now you’ve experienced an auction for yourself, you know exactly what to expect when you bid at the next one!
Have any questions about buying a home at auction, or real estate in general? The team at Ristic Real Estate are here to help! Get in touch today.
