Property auctions are a common and often fast-paced way to purchase real estate in Australia. For both experienced investors and first-time homebuyers, successfully bidding on a property at auction can be a challenging yet rewarding endeavour.
In this article, we will explore valuable tips to help you increase your chances of winning the bid at your next Australian property auction.
How to Win at Property Auctions
Here are some cardinal steps to ensure you have a fighting chance to win your dream property.
Do Your Homework
Before you even think about raising your paddle at an auction, it’s essential to research the property thoroughly. Understand the local market conditions, the property’s history, and its estimated value. This knowledge will help you set a realistic budget and avoid overbidding. Before you ever register to attend, check your state or territory laws on auction registrations.
Set a Budget and Stick to It
Auctions can be emotionally-charged events, and it’s easy to get caught up in the excitement of the bidding process. To prevent overstretching your finances, set a firm budget before attending the auction and stick to it; you may have to limit how many times to place a realistic bid in any auction – and stop if somebody trumps your last bid. This will help you avoid financial stress in the long run plus the spectre of a bidding war.
In this regard, overbidding is a nightmare scenario no Aussie property bidder wants to get caught in. Mozo’s Evlin DuBose stated that you will breach the sale contract if you won but could not pay the deposit then and there. They can even keep your deposit if you paid in full on the spot but did not have financing ready. Worse, your ties with the agent and a lender may be soured, and lead to you being possibly red flagged from bidding in future auctions.
Get Pre-Approval for Financing
To demonstrate your seriousness as a buyer, obtain pre-approval for your mortgage or financing. Pre-approval not only provides you with a clear budget but also makes you a more attractive candidate to sellers.
Attend Other Auctions as Practice
If you’re new to property auctions, consider attending a few as a spectator to get a feel for the process. Observing how auctions unfold and understanding bidding dynamics can boost your confidence when it’s time to bid on your desired property.
Even if you see some familiar faces on the ground, Seb James of the Hunter James agency recommends not approaching anybody to feel out their game plan; you may need a vantage point to monitor everybody for possible tells. Apollo Auctions director Justin Nickerson added that an attendee might not bid anymore if they simply stopped raising paddles.
Arrive Early and Inspect Thoroughly
Arriving early allows you to inspect the property one last time and ensure you’re still interested in it. Pay attention to any last-minute changes or disclosures made by the auctioneer, as this information can be crucial.
Engage an Experienced Buyer’s Agent
Consider hiring a buyer’s agent, especially if you’re new to the property market or auctions. A skilled agent can provide invaluable advice, handle negotiations on your behalf, and increase your chances of success.
In discussions with the Australian Financial Review’s Lucy Dean, Sydney buyer’s agent Kellie Landrey said a buyer attending an auction should talk with the presiding agent and discuss how many people are coming there and which of them have ever downloaded building reports and strata materials. Such queries and analyses may hint to the agent you are serious about bidding.
Bid with Confidence
When it’s time to bid, do so confidently. Don’t be timid or hesitate, as this can make you appear less competitive. However, avoid getting caught in a rapid-fire bidding war; stick to your budget and bid strategically. In a number of cases, your attire may carry that confidence – property agent Greg Brydon of Ray White Cheltenham said to the Herald Sun’s Nathan Mawby that a power suit or a classy shirt may tip to other bidders that you have funds to consider making a substantial offer.
Use Odd Numbers for Bidding
In many cultures, even numbers save number 8 are associated with bad luck. Using odd numbers for your bids can make you appear more determined and can sometimes catch your competitors off guard.
Understand the Vendor’s Terms
Familiarise yourself with the vendor’s terms and conditions for the auction. This includes any specific payment requirements, settlement dates, and any potential contingencies. Being well-prepared will help you make informed decisions during the bidding process.
Stay Calm and Avoid Emotional Bidding
Perhaps the most crucial tip of all is to stay calm and composed. Emotions can lead to irrational decisions and overbidding. If the bidding surpasses your budget, have the discipline to walk away. There will always be other opportunities in the property market.
Why Buy Property at Auction?
Investing in Australian properties through auctions offers several advantages.
Auctions are transparent processes where you can see competing bids in real-time. The presiding agent may also keep their distance from the bidders to ensure everybody is heard and nobody will make sly offers. This transparency ensures fairness and allows you to make informed decisions.
Auctions typically have a fixed timeframe, which means you can secure a property quickly without the prolonged negotiation process often associated with private sales. In many cases, Aussie house hunters might be spared the long drives around a neighbourhood probing for properties with “FOR SALE” signs by simply getting wind of auctions to register.
Bidding at auction can sometimes lead to acquiring a property at a more competitive price compared to a negotiated sale.
When you win at auction, the sale is generally unconditional, reducing the likelihood of a seller pulling out of the deal. It is still important that you have enough money to make the deposit on the spot with the pre-approval finance in place.
Auctions feature a diverse range of properties, from residential homes to commercial real estate, providing various investment opportunities.
Closing Costs
While winning the bid is a significant milestone, it’s crucial to be aware of the closing costs associated with property purchases in Australia. It’s essential to factor these costs into your budget to ensure a smooth and financially sound property purchase.
These costs can include the following:
- Stamp Duty. A state/territorial government tax that varies depending on the property’s value and location.
- Legal Fees. Costs associated with legal documentation, title searches, and conveyancing.
- Building and Pest Inspections. Fees for inspections to ensure the property is in good condition.
- Lender Fees. If you’re financing your purchase, there may be fees associated with your mortgage.
- Registration Fees. Charges for registering the property in your name which may be set by the local council.
- Insurance. Home and contents insurance may be required.
- Moving Costs. Expenses related to moving into your new property, such as mover transport, packing supplies, and transport.
Conclusion
Property auctions in Australia offer exciting opportunities for investors and homebuyers alike. By following these ten tips, you can increase your chances of successfully winning the bid and securing your dream property. With the right preparation and strategy, you can ace the property auction and make a smart investment in Australian real estate.
DISCLAIMER: This article is for informational purposes only. 2 Ezi has no relationships with any Australian property portal or property agent. Please discuss your options with a financial advisor or a property agent.
