The auction process is an exciting and emotional experience. The stakes are high, there are winners and losers, and it can be easy to feel a little daunted. But if you’re armed with the right strategy, it can also be very rewarding. To help prepare as much as possible, we've broken down the process from start to finish.
Before the auction
The more you’re prepared, the better decisions you’ll make – as there are key differences between buying at an auction and a private sale. For starters, going through the private sales process means can make the contract conditional on finding acceptable finance. Plus, there’ll be a cooling off period to get everything in order, or pull out of the sale completely. If you’re the winning bidder at an auction, there’s no cooling off period or finance conditions, which means you need to be ready to pay the deposit straight away and complete the purchase usually 30 to 45 days later.
Before you arrive at the auction, it’s best to have pre-approval or conditional approval for a home loan (https://www.racq.com.au/banking/loans/home-loans). This will put you in a safe position to bid, as you’ll know your maximum price limit. To avoid bidding too high, do some market research to get a realistic idea of how much the property is worth. Chat to a licensed real estate agent, attend open inspections in the area, and use tools like SmartMaps (https://www.qld.gov.au/housing/buying-owning-home/smartmaps) or online suburb pricing guides (https://agent.realestate.com.au/agent-marketing/resources/). If you’re willing to pay for it, you could hire a property valuer to do all this for you. Make sure to also organise a building and pest inspection of the property and have a lawyer look over the contract.
It’s worth pointing out that auctions are quite theatrical. And if you haven’t been to one, it’s easy to feel intimated. So we suggest attending a few to get a feel for the atmosphere, language and different bidding techniques.
During the auction
The golden rule? Stick to your budget. Again, there is no cooling off period for buying at an auction, so if you’re the highest bidder, get ready to be the home owner.
Before the auction, it’s important to wrap your head around the reserve price and vendor bids. Basically, the reserve price is the minimum sale amount that the seller will accept. Once this price is reached, the property is officially ‘on the market’. Vendor bids are primarily used to encourage bidding, but are only legal before the bidding reaches the reserve price. They’re either called out by the seller, or from the auctioneer or their behalf.
Take your time, be confident, and state your bids clearly using whole dollar amounts. If you’re not feeling confident, you can always use a buyer’s agent. They can teach you the ins and outs of an auction and even bid on your behalf.
After the auction
There are a few scenarios that can happen here. Firstly, someone could outbid you and you walk away. But don’t be disheartened – it’s important to stick to your budget and keep your finances safe. Alternatively, you could be the highest bidder, but the reserve price isn’t reached. This means you have first right to negotiate with the seller for a private sale. Lastly, you could win the auction outright. In this case, you’ll have to think about the realities of being a homeowner. The first step? Protecting what you’ve just bought.
We all know how harsh the Queensland weather can be. Be it floods or fires, it’s important to consider home and contents insurance (https://www.racq.com.au/insurance/get-insurance/home-and-contents-insurance) to protect you if disaster strikes. Once you’ve settled in, it’s also worth considering home window tinting. (https://www.racq.com.au/cars-and-driving/products-and-services/home-window-tinting) Tinted windows can make your home cooler, prevent heat build up, reduce air conditioning use, and effectively, cut down on your energy bills.
While you might have done a thorough inspection, moving into a new home is full of surprises. Whether it’s a burst pipe or a blocked toilet, it’s worth looking into home assistance products
. Having fast access to trusted tradies can make the move stress-free – now and down the track.
It’s safe to say an auction is more than just about the bidding. From start to finish, it can be a challenging experience. But like we’ve already mentioned, doing plenty of research and knowing what to expect will make the process much more satisfying.