5 tips to give you the best shot at auction
Some thrill seekers opt for skydiving, others prefer jet boating – but nothing compares to the thrill of raising your paddle at an auction. For first home buyers, it’s especially nerve-racking, but with a solid strategy, a calm approach and a bit of luck, you’ll come out on top when that hammer drops.
There are many pros and cons to buying a home at auction, and while auctions aren’t suitable for everyone, they are worth considering for the following reasons:
Transparency: There’s no room for backdoor dealings at an auction. All offers are made out in the open and when the final offer is made, the deal is done.
Speed: If you’re looking to secure a property quickly, an auction is the way to do it. You can avoid all the painful back-and-forth.
Price: At auction, you can get a sense of the real market value of a property. After all, a house is only worth what someone is willing to pay for it.
If you’ve found your ideal first home and want to put your hand up on auction day, there are a few things you can do to prepare yourself.
Do your homework
Buying a home, especially at auction, is a huge decision and requires some research. First, you should familiarise yourself with the auction process. Get clued up on all the property jargon, find out what happens before and after the sale, research different bidding strategies, and comb through a standard contract of sale to understand what you’re signing up for.
Book in some time with your conveyancer or home loan specialist to ask any curly questions you can’t find answers to online.
Secondly, you should dedicate some time to researching the market you’re buying in. Check out recent sales in the area and invest in suburb reports to understand what the market is doing. The more information you have, the more confident you’ll be on auction day.
Sort out your pre-approval before auction
Once that hammer drops there’s no going back, so make sure you have the funds to go through with the purchase. Besides having your 10% deposit ready to go on the day, it’s a good idea to sort out your pre-approval before you commit to a purchase you can’t afford.
Pre-approval is when a lender conducts an initial assessment and gives you an idea of what they might be able to lend you. The price range they provide you can help you determine your upper limits on auction day and give you an added layer of confidence. However, it’s important to remember that this type of approval is subject to a full assessment when you apply.
Get to know the property inside out
When purchasing a home, you can’t exactly ‘try before you buy’, but you should inspect the property thoroughly before deciding on the one. If there are multiple open inspections scheduled for your desired property, attend as many of them as you can.
Seasoned homebuyers know what to look out for at an open inspection. But for first timers, you might consider speaking to a buyer's agent or real estate professional to get some tips.
Be sure to get a pre-purchase pest and building report done to ensure the property is worth pursuing. Trust us – it’s worth the investment!
Attend a few auctions and develop a game plan
Desktop research is vital when preparing for an auction, but nothing prepares you like watching one go down first-hand. Go along to a few auctions in your desired area and simply spectate. You’ll get a sense of how the day runs – the order of events, how quickly things move and how other potential buyers approach the bidding process.
Not sure how to bid at an auction? Watch and learn. You’ll likely pick up a few helpful strategies.
Top tips for bidding at auction
Don’t be the first bidder – Spend the first half of the auction observing, then come in strong once the bidding calms down and the non-serious buyers have dropped out.
Bid with round figures – Avoid odd numbers that leave a gap for someone to outbid you. If you offer 849,500, chances are, your competition will round it up to a clean $900k.
Counter quickly and confidently – With a solid game plan in place, you’ll be able to swiftly counterbid without blowing your budget.
Stick to your budget
Staying calm is crucial for navigating an auction. It’s easy to get caught up in the drama of it all, but it’s vital to ensure your emotions don’t get the better of you.
Remember your game plan and, most importantly, remember your budget. You should have two numbers in mind before you go into battle: your ideal price and the absolute maximum you’re willing to pay if the bidding goes beyond that.
Need a sidekick at auction?
Bank of Queensland will go above and beyond to help you win at auction. If you need a wingman to give you the best shot on the day, speak to a BOQ home loan specialist.
Contact your local branch or BOQ home loan specialist today.
