Buying a home
What can I expect at auction?
17 October 2017
Property auctions can be exciting, especially if you are the successful bidder (or if you really love fast-paced shouting). Buying in the high-pressure environment of an auction can be stressful, but if you're prepared, you'll find it a lot easier – and you just might snap up a bargain.
How do auctions work?
Bidders must register with the real estate agent before they can participate. Once the bidding starts, it'll continue until the highest bid is received or until the property is passed in (meaning that the vendor decides not to sell because the price isn't high enough).
If the property does pass in, the highest bidder is often invited to negotiate privately with the vendor, but they're not required to.
As with every aspect of the home-buying journey, the more prepared you are before attending an auction the greater your chances of success.
There are a few steps you can take that'll help you get to know the property better, including:
- seeking certified legal advice;
- requesting a vendor's statement (sometimes called a section 32 in some states), which will outline important details such as the property's size, title details, etc;
- arranging a thorough building inspection and/or pest inspection;
- personally inspecting the property to ensure it meets your needs; and
- researching the surrounding area, including things like the location of schools and public transport.
- You should also try to form an idea of how much the property is worth. There are a few ways that you can do this, including:
- checking the sale price of other properties in the same area via the major real estate websites;
- attending the auctions of similar properties and observing what they sell for (if they sell at all); and
- having the property professionally valued.
Of course, any figure that you come up with will be an estimate only. Ultimately, the house is worth whatever someone is willing to pay for it. If you're headed to an auction, be prepared to be surprised.
Stick to your budget
Set a price limit for yourself. If you've done your financial prep work, and especially if you have pre-approval on a home loan, you should have a very good idea of what your maximum bid can be. If you're not sure how much you may be able to borrow, our Suncorp Bank borrowing capacity calculator might come in handy.
Be disciplined - don't get caught up in the excitement of the bidding and go beyond your limit. Some people will physically turn their back on the auctioneer once their price limit has been exceeded, or even walk away from the auction entirely while it's in progress. If something like this helps you to stay on budget, then go for it. Don't worry, nobody's going to think you're being rude.
Attend a few auctions as on observer, with no intent to bid. You'll start to get a feel for them, and hopefully you won't be as nervous when the big day hits.
When you're ready to bid for real, have your finance organised and bring a cheque for the deposit. You'll need it if you're the successful bidder.
If you'd like to get the ball rolling on a loan pre-approval to help with you planning, send Suncorp Bank an enquiry today. And if you're headed to auction any time soon – good luck!
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.
Any advice contained in this document has been prepared without taking into account your particular objectives, financial situation or needs. For that reason, before acting on the advice, you should consider the appropriateness of the advice having regard to your own objectives, financial situation and needs. Where the advice relates to the acquisition, or possible acquisition, of a particular financial product, you should consider the Product Disclosure Statement before making any decision regarding the product. Contact us for a copy.