- Posted 15 Jan
- 0 Comments
Buying a property at auction has some clear advantages. The sale process is usually quick and for the astute buyer, there are many bargains to be had. It’s not all that easy, however when you consider the quick-fire action needed during auctions and potential for profit, coupled with the nerves and pressure of having to make split-second decisions, it can end up being a very stressful time.
There’s no doubt that auctions can be a bit of a minefield and with estate agents trying every trick in the book to drive up prices, the bargain you had in mind can turn into a heavy financial burden, if you’re not careful. The following buying strategies can help you get an advantage during property auctions, which is why real estate agents often want to keep them a secret!
1. Know the Market Value
Do extensive research on the property you have your eye on to find the true market value. You can come to a rough estimate by doing the following:
- Research sales in the area – what is the average sale price over the past 6 months?
- Talk to real estate companies – talk to local agents to get a feel for the neighbourhood and the market in general
- Get a price guide on your property – we can help you get a valuation with our free price guide service
Ensure you arrive equipped with a value range so that you don’t end up bidding above what a property is actually worth. Remember, one of the advantages of an auction is the potential for a good deal. You will only be able to get one if you are familiar with the market.
2. Stick to Your Budget
Many property investors make their way to auctions with the idea of saving money, but end up paying more than they can afford. Once the thrill of the auction begins, it’s difficult to control the urge of bidding just a little bit more to land the property you want.
That’s where real estate agents make their profits – you have to make sure you stick to your budget and don’t let the emotion take over. Before you arrive at the auction house, know you’re upper limit and stick to it. Don’t allow a particular affinity for a given property to be an excuse to overbid.
3. Attend Other Auctions
We advise potential investors to get an idea of the auctioning process before making a bid themselves. It gives the opportunity to observe professionals at work without the need of immediate involvement. You can learn quite a lot just by watching buyers, sellers and auctioneers.
The reason this is such an important step is that it removes the unfamiliarity of the auction, saving you from making mistakes when making your own bids..
4. Keep Your Cards Close
When dealing with a real estate agent in charge of an auction, it’s important to not be too open with them. It’s the agent’s job to try and get the highest price possible on the property and extracting information from potential buyers is part of the whole process.
When you speak to an estate agent, don’t give away any financial details. Your budget or how much you think the property is worth, should be left a mystery. Don’t let on that you’re interested in a given property, even if it’s your dream home. You don’t want to unintentionally drive the reserve price up.
5. Hire a Professional
For those that think the heat of the auction house may be too much to handle, it’s worth thinking about hiring a professional that knows the ins and outs of the process. They’ll know exactly when to bid and when to hold back, ensuring you get the best price possible.
In addition, it removes the emotional aspect from the equation. A buyer’s agent will not be tempted to go over your budget, as there is no attachment to the property in question.
6. Pre-Auction Negotiations
Many first-time property investors don’t realise that it’s also possible to negotiate on a house pre-auction. If there’s a property you really want, it may be an avenue worth exploring.
Sellers will often be willing to let go of their property pre-auction if the price is acceptable, as it removes the danger of the property going for cheap and it can speed up the documentation and final sale.
Let the agent know you’re a serious buyer and come equipped with all the necessary paperwork to drive the sale through quickly. This can often seal the deal, as it makes the entire process easy for the seller.
If you’re ready to get started, you can obtain pre-approval or find out how much you can borrow using the handy calculator offered by Australian Credit and Finance.