Buying a home
My experience buying a house at auction
29 January 2018
This article is part of The Homeowner’s Journey series, featuring case studies from homeowners and property professionals.
Buying a house at auction is an exciting, nerve-wracking experience. If you’re thinking of buying your first home at an auction, it’s useful to know what to expect before you show up to face the competition. Adam Zimmermann has gone through the experience of buying a house at auction twice, and shares what he’s learned.
I’ve experienced buying a house at auction two times: first an investment property in 2011, and then, in 2015, a home with my wife Sophie. Here’s a bit about what I learned throughout the process.
Goodbye social life, hello house-hunting
It took around three to five months looking for properties before I bought, in both cases. I would have inspected at least thirty properties during that time. There‘s quite a lot of work required in the lead-up to buying a house at auction.
Sophie and I especially found this to be the case when we bought our house in 2015. We managed to get the house-hunting process down to a fine art. She would make a list of all the suitable properties, I’d look over and shortlist them, and we’d spend our weekends looking at up to ten properties a day. We really found that in the weeks leading up to buying we didn’t have a social life at all.
Adam and Sophie
During the auction
I have to admit, bidding in an auction is pretty exciting. You feel quite powerful being the centre of attention. All eyes are on you and what you’ll do next. In that sense, it can be quite nerve-wracking too.
I can see the benefit of getting someone to bid on your behalf if you feel like you could be at risk of getting swept up in the emotion, or if you’re not comfortable being the centre of attention. If you don’t think you’re going to enjoy bidding at auction, it might be worth considering getting a third party to bid on your behalf.
I found that it’s important to be clear in your head about what your financial limit is. But at the same time, you have to consider whether this could be a once in a lifetime opportunity – sometimes you have to push yourself out of your comfort zone.
"The concept of money becomes a weird thing during the auction. Caught up in the moment, it can be easy to go over your limit. In a matter of seconds you’re adding $10,000 extra to your bid."
(Think about it: last weekend you may have been tossing up between buying a $30 T-shirt or a $40 T-shirt…)
My top tips for buying a house at auction
1. Do your research and look beyond appearances
It almost goes without saying, but doing your research is essential. Research the area and look at the history of the property, its rental income history, if it has one, and how many times it’s been bought and sold in the past. At the same time, you need to look past the current state of the property and see its potential. The investment property I bought in 2011 needed a lot of work, so I needed to look beyond that, especially as I wasn’t going to live in it myself.
2. Know your limits and expect the unexpected
Set a financial limit. Your opening may come when you least expect it. Sophie and I weren’t expecting to buy the home we did. We’d been outbid at an auction earlier that day so were feeling a little defeated. But, luck was on our side. The auction was at 3pm on a really hot day, so lots of people may have been turned off from attending, and we ended up being the highest bidders.
3. Refine your bidding technique
When it comes to bidding at auction, be confident and don’t hesitate. That’s how I knew when other people were nearing their limit. Be very confident in what you do and don’t do. If you choose not to bid, stick to that – don’t give anything away. When you are bidding, make it clear you’re in it to win it. Hang back as long as possible and bid when the price starts going up. Don’t waste time bidding on smaller, insignificant bids or people won’t think you’re serious.
If you’re buying a house at auction, it’s highly recommended that you go in with a Home Loan pre-approval for peace of mind that you have the finances to back you. To learn more about Home Loan options, arrange an appointment with a Suncorp Mobile Lender, enquire online or call the team on 13 11 55.
The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.
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