One of the key differences between buying at auction or buying using a private treaty is that a sale at auction is unconditional. That means, as a buyer, you’re not able to add conditions such as subject to finance or subject to a building and pest inspection. Therefore, you need to be prepared and organised when the time comes to make a bid at auction.
Here are some things you should do to best prepare when a house you want goes under the hammer.
Know the True Value
When a property is selling at auction, it’s important to have a realistic understanding of what that property is likely going to sell for. Typically, properties will sell for a similar price to comparable houses that have recently sold in the same area. The best way to identify comparable sales is to look at property sales in the same suburb, with a similar property type and land component as the real estate you’re looking to buy.
Understand Auction Day
Most people only buy a few properties over the course of their life. That means if you’re buying a home at auction, it’s likely you’re not going to be very experienced at the process. It’s a good idea to attend a number of auctions in advance so you can get an idea of how the process works and to help you feel more relaxed on the day.
Organise Your Finances
It’s vital that you have your finances in order before any property purchase, but it’s even more important when you are buying at auction, given the sale is unconditional. The easiest way to do this is to speak to a mortgage broker and start the loan preapproval process. The most important part of preapproval is that it should give you confidence you can likely get a home loan when you bid at auction. However, it will also give you clarity around exactly how much you can pay for a property.
Understand the Conditions
If you are to bid at auction day, you will need to register with the sales agent and make yourself familiar with the conditions of sale. It’s vital that you review the conditions of sale as it will outline when and how much deposit is to be paid. If you’re unsure about anything, consider getting the documents reviewed by a professional. If you want any inspections done, such as building and pest, it’s up to you to take care of that prior to auction day.
