Buying at auction can be intimidating; however, if you are prepared and have done your research it is certainly possible to buy this way.

‍

Know the value of the property

‍

Most people are prepared to accept what a sales agent tells them when they ask how much a property is worth. In many instances, the price guide is far lower than what the property will actually sell for.

As a buyer, you need to conduct your own research on comparable sales, in order to get a clear idea of what a property is worth. Look at sales of properties in the same suburb in the last six months, focusing on homes of a similar type, age and land component.

‍

Check the details

‍

It is important to check all the contract details and arrange your inspections prior to attending an auction.

Contract of sale: It is advisable to get the Contract of Sale reviewed by your conveyancer or solicitor prior to auction.

Building and Pest inspection: It is advisable to get a building and pest inspection done prior to auction, as this type of sale is unconditional, should you be the winner on the day.

Bank transfer limits: It is important to speak to your bank prior to auction, as you will be required to pay 5-10% of the property value, and that can cause issues. Either get your daily transfer limit increased or get a cheque book issued in advance.

Get a pre-approval

‍

It is vital that you have your finance in place before you start looking at properties, particularly if you intend to bid at an auction. If you know how much you can spend, you can bid with confidence, because you will know what your budget is.

Auctions are generally not conditional sales, meaning that you face significant costs if you are unable to settle on the property. The exact details will be laid out in the terms of sale, but generally, there is no subject to finance clause, there is no way to back out and you will be required to pay 5-10% of the property value on the day of auction.

There is no cooling-off period if a property is sold at auction, and that also applies when a property is passed in and contracts are exchanged later that day. This is laid out under Section 66T of the Conveyancing Act 1919 for NSW. In Victoria, if an offer is accepted less than three business days prior to auction, you do not get a cooling-off period either.

Talk to the agent

‍

It is worth noting that you can purchase a property prior to the auction. It is worth speaking to the sales agent to find out if the vendor will accept a pre-auction offer.

But do not give away too much information about your own personal situation, as the agent could use this to his or her advantage on auction day.

Be prepared and confident

‍

When the auction day arrives, it is important to be prepared and to get there on time.

People like to attend auctions, particularly those who live nearby. However, they are not serious bidders. You can assess your competition if you arrive early, and you can also use the opportunity to speak to the sales agent, to get an idea about the number of registered bidders.

When bidding, be confident. This can project strength and might make your competition think twice about ramping up the bidding.

However, always know what your maximum price is, and be prepared to walk away. Auctions can deliver great results for the vendor when buyers get emotional. Do not let that happen to you.

‍