As a first home buyer, attending an auction can be an overwhelming experience. With so much pressure to make the right decisions, it's easy to get caught up in the excitement and lose sight of your goals.
However, with careful planning and preparation, buying your first home at auction can be a rewarding and successful experience.
Before attending an auction or making a pre-auction offer, it's important to research the property and the area it's located in. Understanding the value of a property is a fundamental part of your research.
This knowledge will guide you in setting a realistic budget. You should also attend a few auctions before bidding on a property. This will give you an idea of how the auction process works and what to expect on the day.
Understanding Your Finances When It Comes To Auctions.
It's important to have your finances in order before attending an auction, as auctions are unconditional.
One of the most important things you need to do is to get pre-approved for finance. This will give you confidence in how much you can spend and what your monthly repayments will be like.
As not all banks are created equal, it's best to talk to a Mortgage Adviser to make sure you have maximised your borrowing power so you are in the best possible position to buy on the day.
Even if you've already secured pre-approved lending, it's important to make sure you get the property “signed off” by the lender before auction day just to make sure they are comfortable to take on that particular property as security.
Setting Your Maximum Budget (and sticking to it).
Setting your maximum budget is another important thing you need to do before attending an auction.
Your maximum budget should be the absolute maximum amount you can afford to pay for the property, taking into account your pre-approved mortgage, the deposit you have saved and any other costs associated with the purchase.
When setting your maximum budget, it's important to be realistic. You don't want to overextend yourself and end up with a property you can't afford.
You should also take into account the value of the property and what similar properties in the area have sold for.
Understanding the Auction Contract.
The auction contract is a legal document that sets out the terms and conditions of the sale.
Before bidding at an auction, take time to read and understand the auction contract and ideally have your solicitor look over it.
Some of the things you should look out for in the auction contract include the deposit amount, settlement period, and any special conditions.
If you wish to alter the agreement or impose any conditions on the sale, such as a reduced deposit amount or change in settlement date, you must arrange this before the auction with a document known as a variation of agreement.
Any proposed changes should be discussed with the real estate agent and your solicitor . The vendor (person selling the property) will then decide whether they are willing to accept your proposed changes or conditions.
Tips for Bidding at Auction
Bidding at an auction can be an exciting but nerve-wracking experience. Here are some tips to help you bid with confidence and success:
Winning the Auction - What Happens Next?
Congratulations! If you are the successful bidder at an auction, you will be required to sign the auction contract and pay the deposit then and there, so you need to make sure you have your deposit money available to transfer.
This is where working with a Mortgage Adviser throughout the process can really help to make sure you have these things covered so you aren't caught short on the day! Feel free to reach out so we can set you up for a successful auction experience.