Real Estate Newsletter, Brisbane Southside, Queensland

How to Buy Your Dream Home At Auction

ASK FOR A BALLPARK FIGURE

You have found your dream home and it's going to auction. Your next step is to ask the Agent for a ballpark figure on the home. The Agent will be reluctant to tell you, as they do not want to divulge what they are expecting to get, but most times you will be given a range. Do not ask for a bidding guide, as this can be misleading.

Most Agents will suggest that you make an offer on the property. When you make an offer it is made on a Contract and the Agent representing the vendor will deliver that contract to the vendor. The vendor will either accept the offer or not. There are no conditions that apply to an auction contract.

It is actually important that offers are collected in writing on a Contract, by the Agent, as these offers let the Vendor know what the market will bear regarding pricing of the property * . The Vendor will advise the Agent of the Reserve Price, usually on the day of the auction, not before. This allows an auction to be an auction - no-one knows the price! If you knew the price, then there wouldn't be an auction, would there? Once you have made an offer, it is expected that you will attend the auction to make your bid.

If this was not an auction situation, then the vendor would cross out the offer and put what they want for their price, then it would go back to the buyer who would either agree and sign, or would cross out that offer, and return to the vendor. Of course, offers back and forth occur via the Real Estate Agent.

Additionally, remember that emotions are brought into play during an auction, so that when you are competing against another bidder and have decided that this is the home you want, you may continue bidding past the point where you should stop! This is the unknown element of an Auction that helps to push the price up - making it a great way to sell when it happens.

CHECK OUT SOME AUCTIONS

Go to an auction or two and see how other people bid. Watch the bidders and observe what they do. Remember to keep your arms and hands by your side! Attending auctions will help you to gauge pricing of properties and what the market will bear in that pricing.

Get a feel for prices in the area

Check out as many open houses (that are of similar style, size and location) as possible, to get a feel for prices in the area. After about five opens you will have a reasonable idea of values for the area. If there are major variations in price, try and find out why:

For example:

• Near or on a main road - this will make the property less attractive and therefore the price will be less.

• Is it near water (river or beach) or is there a view? If the answer is ‘YES”, this will push the price upward.

• Other factors that may increase or decrease price, include whether the property is near public transport, a park, church or school, or not.

All these things affect the price, and all of these things will appeal to different buyers. Ask me for a copy of our FREE Report Last 6 Months Sales in Area.

FINANCES

Have your finances in order prior to the auction i.e. get a pre-approval from the bank but make sure you tell your banker you intend to bid at auction.

This is important, as there can be issues such as valuation that may impact on your ability to bid. All banks will give pre-approval finance happily if there is a contract coming at a later date.

If your bank won't give a pre-approval go to another bank. Use a broker where possible as they generally deal with around 14 lending institutions. If you know you can afford the loan, keep looking until you get a satisfactory loan.

Inspections

Get a building and pest inspection done prior to the auction. It will cost you a couple of hundred dollars but it is money well spent, especially if you were to buy without it, and later on find the home you covet has major faults. Want to know what is involved in Property Inspections? Call for a copy of our FREE Report Inspections?

Your Deposit

Generally you will find there is a deposit of between 5% and 10% required on the day of the auction, if you bid successfully for the property. Once again, if you don't have that amount saved you will need to make arrangements with the bank.

Legals

Check with your solicitor regarding property searches etcetera, as there may be freeways, roads and other potential encroachments impacting on the property. It's best that you find out these things before the auction, as it may influence your decision. Generally most of this information will be on display on the day of the auction.

The Big Day of the Auction

• Go to the open house and register as a bidder.

• Stand where the auctioneer can see you.

• If you do not wish to bid you could have a friend do it for you or you could hire an Auction or Buyers Agent to act for you.

• If you wish to use an experienced Auction Agent, make sure you have set the limits of bidding and when they are to check back with you.

• Make sure that all commissions and fees are disclosed up front.

• Read all the literature that is on display especially the Title Search for any encumbrances and remember what your solicitor told you.

Set Your Limit

Have a limit you want to go to, plus a comfortable margin above that (you wouldn't want to miss the home for $100.00).

On the day of the auction, if you are successful in your bidding, you will need to be able to write a Cheque for the amount of the deposit, or have a bank Cheque, usually 5 - 10% of the purchase price. Check with the Auctioneer prior to the auction on the level of deposit required so that you are prepared.

There are no conditional terms on an auction contract. Once you have successfully bid, then that's it! So, make sure that it is the property you want, that you don't exceed your financial limits, and settle back and enjoy yourself!

This Report is aimed at helping you learn more about Auctions, and the Property Market and how to get the best result for you. Thank you for calling on me for help. If there is anything further that you require, do call.