For those that have attended an auction before, you’ll understand that they are unpredictable, stressful yet exhilarating. However, if you are looking at entering the property market, it’s important to get comfortable within the auction environment.
Here are several tips that will help you feel comfortable and confident at auction time.
Check your approval status
It’s important you understand that auctions are unconditional, no exceptions. As soon as the hammer drops and your bid is successful, the house in its current condition is yours.
Thus it is important you understand and check what type of approval you have received from your lender. Because if you don’t have unconditional approval and you win the auction, you could be caught in a tricky situation.
Know the house
Besides the financial aspects of buying a house, the most important thing to do is ensure the house is exactly what you want. Because once you’ve won the auction, there is no going back.
So it’s critical you take the time to do your homework and go over all the paperwork and documentation well before the auction. This includes paying for a building inspection, requesting a LIM, reviewing the title and viewing the house several times.
Involve your lawyer
Many people think that lawyers are only important once you have successfully won an auction. However, this isn’t true. We recommend getting your lawyers involved as soon as you’re serious about a house.
To guarantee you are buying exactly what you are expecting, get them to take a look at the Sale and Purchase Agreement, title information and anything else that may impact your decision.
Have the deposit ready
Make sure you have the deposit in your bank account and ready to be handed over on the day of the auction. Because once the auctioneer brings the auction to a close, if you are successful, you will need to finalise the Sale and Purchase Agreement and pay the deposit that day.
Thus, make sure you have everything sorted from your lenders' approval, KiwiSaver, and any transfer limits either lifted or partially removed. This will mean once you have won, there are no hurdles to you taking ownership.
Attend other auctions
They say practices makes perfect, but how do you practice for an auction? Realistically the closet you can get is by attending several auctions prior. This will help you get a feel for how auctions work, the atmosphere and what is expected from bidders.
We also recommend attending auctions at both formal auction room and on-site at the property itself. Additionally, if you can attend auctions that are run by the realtor in charge of the auction you’re interested in, all the better.
Arrive early
On auction day, it is important you arrive early. This serves two purposes, one so you can register your interest and sign in, signalling your intention to bid. Two, so you can get an early gauge on the others attending the auction, this is purely an aspect that will allow you to see who your competition is and get a read on their interest.
Stay within your limits
Auctions are high-pressure environments, and if you are not prepared or understand your limits it’s fairly easy to find yourself in a losing situation. There are countless horror stories of people engaging in auctions, only to find that they have blown out their budget by tens-of-thousands of dollars.
To avoid falling victim to this, make sure you have a concrete budget in place that clearly outlines what you can afford comfortably and what your absolute limit is.
At the end of the day, the biggest tip we can give be preparing to bid at an auction is to stay cool, claim and collected on auction day and go into the auction with everything in line. By do this, you’ll be putting yourself in the best position to leave the auction with a brand new home.
If you would like any advice on preparing for an auction or gaining preapproval from a lender, make sure you get in touch today. We will be able to help put you in the best position possible to succeed.