Is It Better To Buy A House At Auction?
✅Buying a house at auction can be a daunting process.
✅You will need to have your finances in place before you bid.
✅Undertaking thorough research and being prepared is the key to auction success.
Talk to us before going to auction
Benefits of buying a house at auction
✅Prices can sometimes be lower than market valuations.
✅There may be less competition.
✅Auctions force you to be prepared with your pre-approval and 'action plan'. Know what you can afford before you bid.
✅The sales process happens quickly over the course of an afternoon, rather than months on the market.
Preparation is key
✅Doing your homework makes the process easier. Have your mortgage broker put a pre-approval in place before the auction so you can bid with confidence. Emotions will race when the bidding starts; knowing what you can pay, and having a plan around your bidding will make it much less stressful.
✅Use a mortgage broker to know your borrowing capacity. Mortgage Broker Revesby can organise your pre-approval.
What happens on the day of auction?
✅Use the open inspection to take a final look at the property and the auction rules.
✅Make sure you receive your copy of the 'bidders guide' before the auction. This will contain the information you need to know such as:
- how to register to bid?
- what Identification you must provide to register.
- what's expected of every bidder.
✅The auctioneer must also list the auction rules for potential bidders:
- the highest bidder is subject to the reserve price.
- the auctioneer can make one bid only on behalf of the seller.
- the auctioneer must announce that he/she is entitled to make a bid on behalf of the seller.
- the auctioneer must announce they are making the vendor bid.
- there are no bids accepted after the hammer falls.
- the successful bidders name goes to the auctioneer as soon as possible after the auction.
Know what is expected of you
✅Buying a property at auction is very different to other private treaty purchases. It's usually run by an estate agent auctioneer and adheres to strict rules.
✅If you have the highest bid when the hammer falls, you must sign the contact right away. This is why it's essential to have a pre-approval in place before you bid so you know what you can pay. Mortgage Broker Revesby will guide you through the process.
✅Must register with the vendor's agent and receive a 'bidders number'. You must show the bidders number to the auctioneer when you bid.
✅The seller will usually nominate a reserve price, which the auctioneer most likely won't tell you. Once the reserve price is met, the highest bidder from then on will be successful. You must sign the contract on the spot and pay the deposit of usually around 10%.
✅There is no 'cooling off' period as with private treaty sales. You must be ready to exchange contracts and complete the sale or you may lose your deposit and be liable for damages suffered by the vendor.
✅You must have a building and pest inspection.
✅Bids in an auction are unconditional. There are no conditions like 'subject to finance' etc.
✅Know your maximum bid and stick to it. Do not get caught up in the euphoria of the action. There are serious fines for bidding more than you can pay.
Get professional help selecting your home loan
✅The unconditional contract for the successful bidder is clearly the scariest part of the auction. Once you sign, you must pay your deposit. You simply cannot back out without severe penalties. It's crucial to be guided by a mortgage broker through the process. Mortgage Broker Revesby will help you bid with confidence so you don't caught short. And with no service fee, why would you go it alone?
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