4 tips for buying a property at auction

August 08, 2018 by Rebecca Crommelin

If you’ve been to an auction before, you’ll likely know how crazy competitive they can be and that there can only be winners and losers.

Mortgage Choice’s Evolving Great Australian Dream whitepaper  revealed that 89.2% of prospective buyers think auctions are stressful experiences.

Compared to a private sale, where you are directly competing with other buyers who are just as interested in the property as you.

Missing out on a property that you have fallen in love with can make you feel disappointed and disheartened.

But don’t be discouraged, because with the right preparations you can have a much less stressful experience at auction.

1. Know your limit

Don’t bid at any property auction until you’ve spoken to your mortgage broker and arranged conditional pre-approval for a home loan. This is a lender stating that they are willing to lend to you and it lets you know exactly how much you can borrow. Be sure to stick to this limit to avoid overextending yourself at an auction and then not being able to afford the monthly repayments. It’s also a good idea to have a limit set for yourself, so you can bid with confidence and know when to stop.

2. Do your research

As soon as you kickstart looking for a property, you should be doing your research and brushing up on knowledge of the local market. Find out what similar properties in the suburb have been selling for, go to some open inspections, and have an idea of how much stock is for sale on the market. Start attending auctions to observe and get a feel for how it runs. You might even pick up some useful tips on bidding from other buyers.

3. Be sure to have your ducks in a row

Further to arranging pre-approval for a home loan, there are other important things you need to consider. At an auction, there is no cooling off period, so you’re required to pay the deposit on the same day. There is also no opportunity to conduct pest and building inspections. For that reason, before you consider bidding, engage a conveyancer to review the contract of sale and if required, have any inspections done. You do not want to buy a property only to discover that it has major problems which may be costly. On the day of the auction, you should also ensure your finances are in order.  

4. Keep your emotions in check

Buying a property can be a very emotional experience, particularly at auctions where everything is unpredictable and on the line. An auctioneer will likely play on this and try to spur you to throw in extra bids to secure the property. But resist the urge if you have already hit your price limit. Try to stay calm and breathe during the experience and accept that you might have to walk away empty handed. There’s always going to be another property.

Give our expert team at Mortgage Choice in Joondalup & Clarkson a call today on (08) 9485 0090 – let us help you arrange a home loan so you can know exactly how much you can offer on your dream home.

To read more information on the home buying process, click here.