Getting auction ready

Buying a house can be stressful and emotional and when buying through an auction, it becomes even more so. Here are a few tips to help to you get ready for purchasing at an auction from a home loan point of view.

Be prepared early: It can be hard if you go to an open home on a Sunday, and the auction is the following Friday, to get everything you need ready to be in a position to bid. When you see a property that is going to auction, try to view it early and get prepared early if you are keen to proceed.

Allow time: Make sure you give your lawyer enough time to review the property information pack, that is the LIM, the title, and EQC information, and review the terms of the sale and purchase agreement. It’s very important that your lawyer does this before the auction, as when the hammer falls, if you are the successful buyer, you can no longer back out of the purchase. You also need to ensure your home loan is approved early, so that there are no surprises around finance. If you have a pre-approval in place already, and see a property you like, it should only take a few days for the bank to review the property and give you the go-ahead.

Do your homework: Getting a building report is really important to know exactly what you are buying. If you are a low deposit buyer, it’s more than likely you will be required to get a valuation, so ensure this is done before auction day. A valuation may have some impact on how much the bank will allow you to pay for the property.

Decide on your maximum purchase price: You need to know what you are prepared to pay for the property, and what the maximum bid you can place is. Once you are in the auction room, it’s unlikely you will be in a position to increase your offer if you haven’t got your bank approval to that level.

Stay cool: There can be a lot of pressure on auction day, with people encouraging you to bid higher. Make sure you have someone you trust with you to help you remain calm and free of that pressure.

Have your deposit ready: If you are the successful buyer, make sure you have discussed with your bank or broker how you will be paying your deposit. Usually the deposit is 10% of the purchase price, payable on the fall of the hammer - normally within 24 hours.

Auctions can be quite complex, and particularly if you are a first home buyer purchasing at auction. You have to do everything early and before the auction day.  Remember, I am here to help which can give you confidence and take away the stress of buying at auction. If you have any questions, give me a call direct on 027 886 4934. Alternatively you can email me at simon.maule@loanmarket.co.nz