Things to prepare before auction day
Auctions can be a great way to buy a home, but it’s not as glamorous as film and television shows make it seem. There’s more to auctions than simply putting your hand up for a bid and walking away with the deed to a property. As a buyer, it’s important to research and understand the property auction process.
To help you out, we’ve outlined some key things to consider when preparing for an auction purchase:
Thoroughly inspect the property
At a property auction, all sales are final. When the hammer falls and you have the last bid, you’re buying that property. This means that even if the property has issues that you weren’t aware of, you’re still on the hook for it.
To avoid unpleasant surprises, make sure you’ve fully researched the property by doing an inspection. If you’re not comfortable doing this yourself, you can consult someone like a buyer’s agent who can do it for you.
It’s a good idea to get a professional building report done or to ask for a copy of one if the vendor has it available. You can also ask for electrical and plumbing reports, as they can identify any structural issues with the property.
Research the area
When you’re buying a home, you’re also buying into a neighbourhood. Looking at the area is just as important as the property itself. Before going to the auction, learn about the neighbourhood and surrounding areas. Walk or drive around to assess the noise levels, traffic volumes, and scope out the place to ensure it has a community atmosphere that meets your lifestyle.
You should also think about the neighbourhood’s access to public transportation, schools, restaurants, shops, hospitals, and other places important to you.
Look at the local real estate market
Bidding at auctions is typically fast-paced and competitive. It’s easy to get swept away by the excitement and bid more than you expect. To remedy this, it’s essential to understand the average house prices and recent sales history in the area. This can help you avoid overbidding and paying more than you should for a certain property.
An easy way to get an overview of the local market is by getting a suburb report. The one from loans.com.au includes comparative market analysis, median prices, market data, demographic information, and other pertinent information that can help you know the suburb better.
Make sure you’re registered for the auction
Those new to the auction world may not know that you need to register. You usually can’t just stroll in, sit down, and join in the bidding. The registration process is pretty simple; you go to the selling agent and provide the needed documents, such as:
- Identification that includes your full name (e.g., driver’s license or passport)
- Document showing your present address (e.g., utility bills or rental agreement)
- Document issued by your bank
Once you’ve successfully registered for the auction, you’ll receive a bidder’s number from the selling agent. The bidder’s number is important as it’s the one you show the auctioneer every time you make a bid. You can find the number printed on a paddle or a card.
Check the sale contract
Reading the fine print is important, especially at property auctions where the sale is typically final and backing out is not an option. You want to make sure you’ve sorted all the legal issues before the auction starts. Get a copy of the sale contract and show it to your lawyer or conveyancer for them to review, as they could identify any issues with the property you’re buying.
Know how much you can afford
The property you’re bidding on should be one that you can comfortably afford. Once that hammer goes down, you need to commit to the purchase and be prepared to follow through. If the bank declines your request for a loan after your bid is successful, you could be out quite a bit of money.
Before attending the auction, ensure you understand your limits. Get an idea of how much you can borrow using an online calculator. You can change the information on the calculator to see how certain factors can affect your borrowing power.
Once you know how much you can afford, you’ll know your limits. When bidding gets too high, you can gracefully bow out and move on to a property that’s more within your budget.
To get a more accurate amount on how much you can borrow, consider applying for a home loan pre-approval. A pre-approved home loan can help you get your financing ready before you start bidding at the auction. Provided that your circumstances remain the same, obtaining pre-approval can give you a clearer indication of your borrowing capacity. Keep in mind that this is not the same as a guaranteed loan approval.
Speak to a loans.com.au lending specialist now to discuss your options or find out if you qualify for a home loan with us!
Disclaimer: The information provided in this article is general in nature and does not constitute financial or legal advice. Please seek professional advice tailored to your circumstances before making any financial decisions.
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As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.
