Getting Auction ready
Buying your first home should be an exciting time in your life, but if you’re going to auction for the first time, it could seem like a daunting task if you don’t know what to expect.
The bidding game is a balancing act between ensuring you’re not bidding to high and end up paying more than you should, or bidding so low that you miss out on the home you want.
These tips can help to give you confidence to bid and prepare you for your first auction.
Engage a mortgage adviser
Opting to work with an adviser will give you a better understanding of what to expect on auction day and arm you with information about the market.
A mortgage adviser is familiar with the auction process and can lead you from the beginning to the end, ensuring you’re making wise financial decisions that will see you knock out the competition.
Get your research on
Before you go in to bid, it’s important that you have an understanding of the market. Ensure you check recent sales results in the area that you’re looking to buy which will give you an estimation of the market value of the property.
A great way to get an idea of how an auction works is by attending a few, and just observing. By doing this in a suburb that you’re interested to buy in, you’ll also gain an understanding of valuations and demand.
Have your finance approval
Another -and probably the most- important step in preparing for auction is getting a formal pre-approval from your lender. This will not only give you buying confidence but means you now have the lender’s ‘ok’ to go ahead and understand what your borrowing capacity is.
If you buy at auction, the approval is unconditional (legally binding), so you need to arrange your finance and do all the legal [and other] checks, prior to auction day.
- get a copy of the auction contract
- do your due diligence with your lawyer (property titles), the council (LIM) and get other reports done (valuation, building inspection etc)
- arrange your finance with your lender and have your money ready to pay a deposit
Your mortgage adviser can assist you in arranging approved finance so you are in a strong position, come auction time.
- decide on your top price
- the seller may consider offers before the auction. If an offer's deemed to be potentially acceptable by the seller, the real estate agent may contact all potential buyers who have registered their interest and invite them to also put forward their offers for consideration. Or the auction date may be brought forward, with the initial offer becoming the opening bid.
Know your limit
Now that you have pre-approval, you know how much you can spend. Know your limit and stick to it. It’s time to start bidding for the house of your dreams.
Whilst these are basic auction tips, a mortgage adviser can provide you with more information, gear you in the right direction and get you ready for your first auction.
If you’d like to find out more, please register for one of our first home buyers seminars or download our first home buyers guide here.
Can't wait? Speak to an expert mortgage adviser today.