A beginners guide to auctions
If you’ve managed to find the right home loan and are now trawling through the property market, there is a high chance that you will be going to auction.
These can be a great way of locating the highest bid for the seller – but are also quite daunting for all involved, especially those with a first home buyer loan.
Recent figures from a June 25 CoreLogic RP Data release, revealed that not only were there more auctions in Australia’s capital cities than at the same time last year, but the clearance rate has leapt up 11.9 per cent.
One of the main reasons for the increased competition is the current low interest rates, as home loan repayments are easier to manage for the everyday Australian.
You should talk to your mortgage broker if you want financial advice, but additionally, here are some quick tips for auction time.
Investigate
Once you’ve found a house that you like, have a look at the surrounding real estate for sale to get an understanding of its value.
A great way to do this is to attend the nearby auctions, regardless of whether you have an interest in the property. Not only will you get an idea of prices in the area, but you will also get a hands-on lesson on how auctions work.
If you’re serious about the home, consider getting a professional building and pest inspection and a private valuation to get a third opinion on its worth.
According to Consumer Affairs Victoria, with auctions nationwide there is no cooling period. This means once the gavel drops, it is legally binding. Thus, you want to make sure you’ve got your home loan pre-approved.
Bidding
If you are new to the property market, equipped with your first home loan, a good technique is to lay down a bid early on in the auction, as it will get you into the run of things.
The most important part of bidding is to not get carried away. Set a ceiling price and stick to it – sometimes it makes it easier to control your emotions by using a friend or a buyer’s agent to bid in your place.
As mentioned earlier, if you have the leading bid at the end of the auction and it has met reserve, you are legally obligated to complete the sale even if you can’t afford it.
