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Buying at an auction could seem intimidating, especially as a novice. But, in practice, buying at an auction is quite straightforward. With some expert guidance and self-control, you could end up buying a stellar property for a bargain price in a fairly simple manner at an auction.
 
how to win a property auction
 
Of course, there is no denying that the charged-up atmosphere can give jitters to the most experienced of buyers. The bevvy of prospective buyers, the uncertainty of the final price, the fear of losing out your dream home to someone with bigger pockets and the general excitement can induce a rush of adrenaline in the steeliest of hearts.

Thus, it is not surprising if the auction process intimidates you. But by completely ignoring this mode of purchasing a property, you might be passing up some great deals in the bargain. Instead, we suggest that you familiarise yourself with the process to feel at ease on the day.


Here are five tips to follow to prepare yourself for attending an auction:

Observe the process – Before you bid at your first auction, visit a few auctions as an observer to understand the ongoings and the jargon that might befuddle you otherwise. Talk to real estate agents, auctioneers and note how different people adopt different strategies for bidding – a few would make a high bid towards the opening or the end to intimidate other buyers while some others would go through the auction with small and steady bids.

In general, especially as a novice, we suggest that you start early with a low bid. It is important to go slow and stay within your limit, as you are participating in an auction and not a race.


Tick your pre-auction checklist
– Once you win the auction, the property is yours. Thus, it is necessary to do your groundwork before deciding to bid on a property – as you don’t want your dream home turning into a nightmare.

  • Do some research: Scan the market for comparable properties to find out the real market value of the property. The selling agent should be able to provide you figures for past sales in the neighbourhood. Meanwhile, keep your cards close to your chest and don’t share how much you are willing to spend with the seller’s agent.
  • Get pre-inspections: Order all property inspections beforehand to make sure the property is free of any grave issues. While this process will cost you a few hundred dollars each time, it can potentially save you thousands of dollars in costly repairs in the future.
  • Register for bidding: To bid, you must register yourself at an auction before it begins. This can be done in advance or on the day of the auction. Don’t forget to carry your identification documents such as your driving license or passport to register yourself.
  • Set an upper limit: It is easy to get carried away during an auction. Often, buyers find themselves bidding much more than they can afford to spend, ending in a hot soup. We strongly recommend that you keep an upper limit for bidding, and stick to it. While the temptation to overbid is strong, sticking to your limit will save you trouble in the future. Do take into account the additional costs of buying a property when you decide how much you can spend on it.


Do the legal work
– Once you win the auction, you immediately pay the deposit, and the contracts are exchanged. Usually, there is no cooling off period. It is, therefore, pertinent that you get a copy of the contract from the seller and have it reviewed by your legal advisor in advance. In case there are any concerns, have them clarified before the day of the auction.


Get a mortgage pre-approval
– It is highly recommended to have your home loan pre-approved before you bid at an auction. Not only does it help you ascertain your spending limit, but it also makes you feel more confident as a buyer – knowing your funds are ready, in case you win the auction. There are many other advantages of having your mortgage pre-approved. Speak to a mortgage broker to know more.


Keep a deposit ready
– You must keep a minimum 10 percent deposit ready on the day of the auction. Certain sellers might require a larger deposit, and it makes sense to inquire about it before the day of the auction. If you do not have a deposit ready, make sure you get a promissory note or a Deposit Bond stating that the deposit will be paid on the settlement date.


Many investors choose to bid at an auction as a quick and easy way of landing a good deal. If you are planning to buy a house, it is worth trying your luck at a few auctions once you are well-prepared and feel confident about the process. Just remember not to over-commit to a property and walk away if the price crosses your budget. Meanwhile, we suggest you get a home loan pre-approval before you start on a property hunt. Start by comparing attractive low-interest rate home loan deals here.

 

By Vidhu Bajaj,
HashChing Content Writer
 

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