Buying a home at auction — whether it be your first, fifth or fifteenth — can elicit all sorts of emotions, nerves and even excitement.
It’s easy to get swept up in auction day atmosphere and bid beyond budget so before you even contemplate going to an auction for real estate in South Australia — let alone purchasing a house at auction — read our top tips about what you should do to prepare yourself.
You can’t be too prepared
Do your research
Ask yourself some questions and do your homework to find the answers. What are nearby properties selling for? What are the recent local auction results, trends and clearance rates? How does an auction work? Attend some auctions to get a feel for the process and how they unfold, talk to local real estate agents about the market, check the Real Estate Institute of South Australia website for information about auctions in South Australia, and do some desktop research of your own.
Know the process/rules
Knowledge is power. Auctioneers will always read the terms under which the auction will be conducted but prior to auction day make it a priority to familiarise yourself with and understand the process of an auction and the rules you need to operate within.
Are you bidding to purchase the property? Or the right to negotiate below the reserve? Once a property has reached reserve and announced, a bidder should understand that any bid from that point on means ownership of the property.
Pre-purchase Inspections
Your dream home might look good on the outside but what lies below? If you have your sights set on a property for auction and you are a serious contender, then it is essential you arrange inspections through reputable building and pest inspectors.
Once you have this report you can confidently go to auction knowing that there are no hidden nasties or repairs that need to be carried out. This could save you a considerable amount of money, time and headaches down the track.
Loan Preapproval
Get your ducks in a row. Loan preapproval or conditional approval from your bank or lender is a crucial step in preparing to bid at an auction. This process is quite involved and requires credit checks, employment history and a range of other verifications. It can often take several weeks so should be considered well in advance of auction day.
You should also ask your lender what conditions come with the preapproval to purchase real estate in South Australia, such as the loan limit and how long it will take to get formal approval — and shop around if necessary. You may even be eligible for a government grant so be sure to check this out too.
Get your deposit ready
If you’re throwing up your hand, then you need to be prepared to throw down a deposit. If your bid is successful at an auction, you must pay the required deposit on the spot — usually 10% but this is one reason to familiarise yourself with auction and purchase terms prior to putting your hand up in the air.
Pre-auction bid
Can’t wait for auction day? There’s nothing stopping you getting in early with a pre-auction bid. A well-timed and fair offer with reasonable conditions might get you across the line but be sure to think it through, make your offer in writing and have a contract and deposit ready to go.
On the day
Auction day has arrived and so have your nerves. If you’ve done your homework and preparation, then you’re already half way there so try to stay calm and measured. Here’s some tips to get the most out of auction day.
Register as a bidder
Requirements vary from state to state, however In South Australia it is a legal requirement to register as a bidder prior to an auction in order to be able to bid. You can do this prior to auction day but don’t leave it until the last minute!
Pick a strategy, know your limit, stick to it
Be sensible on auction day. Whatever your strategy — play it safe, slow and steady, or high roller — stick to your game plan, be realistic and don’t bust your budget.
Winner, winner
Congratulations will be first order if yours is the successful bid, but you’ll have to kick into gear pretty quickly. The purchase contract will need to be signed which means you have an equitable interest in the property and should therefore take out insurance immediately.
No Sale
Not all auctions will result in a sale under the hammer — perhaps the reserve was too high, the bidding was prudent or there were no bids at all! All is not lost as the highest bidder before the auction ended is given the first opportunity to negotiate for purchase of the property.
Helping you step into our future
We know that auctions can be an overwhelming experience, particularly if you are new to the property market. These tips are just an overview of things you can do to prepare for an auction and auction day. We are passionate about working to create the best outcomes for both vendors and purchasers so if you are buying or selling, contact our friendly and experienced team for a more detailed chat to achieve the best outcome at auction.