7 tips for acing an auction
Buying your first home at an auction can be an exhilarating experience, but it also comes with its fair share of challenges and uncertainties. To help you navigate the exciting world of property auctions successfully, we've compiled a set of invaluable tips for first-time homebuyers. By following these guidelines, you can boost your chances of securing your dream home without breaking the bank.
1. Research is Key
Before you even think about raising your paddle at an auction or making a pre-auction offer, investing time in thorough research is essential. This means understanding not only the property you're interested in but also the neighborhood it's situated in. Knowing the true value of the property will enable you to set a realistic budget, preventing you from overpaying.
2. Attend Auctions as an Observer
Knowledge is power, and when it comes to auctions, experience can be a game-changer. Attend several auctions as an observer before you consider bidding on a property. This will acquaint you with the dynamics of the auction process and help you know what to expect on the big day.
3. Get Your Finances in Order
Auctions operate on an unconditional basis, which means you must have your finances sorted before you participate. The first crucial step is obtaining pre-approval for your finance. This pre-approval not only helps you determine your budget but also provides insight into your monthly repayments and what you can expect to be paying towards your loan once the hammer falls.
Working with a mortgage advisor is highly recommended, as we can help you maximize your borrowing power. It's also essential to ensure that the lender approves the specific property you intend to bid on.
4. Set a Realistic Maximum Budget
One of the golden rules of auction participation is to set a maximum budget and stick to it. Your maximum budget should encompass your pre-approved mortgage, any deposit you've saved, and any additional costs related to the purchase. Be realistic and consider the property's actual value and recent sales of similar properties in the area.
5. Understand the Auction Contract
Before bidding at an auction, familiarise yourself with the auction contract. It's advisable to have your solicitor review it as well. The auction contract outlines the terms and conditions of the sale, including the deposit amount, settlement period, and any special conditions.
If you wish to make changes to the contract, such as altering the deposit amount or settlement date, you must arrange this before the auction using a variation of agreement. Consult with the Real Estate Agent and your solicitor to ensure all changes align with your needs and are acceptable to the vendor.
6. Bidding with Confidence
Bidding at an auction can be a mix of excitement and nervousness. It’s important to remain confident however and stick to your plan. Make sure you get there early to get a good seat and don’t hesitate to start the bidding as this shows others that you are serious. When bidding, do so in a clear and confident voice. It’s also a good idea to keep an eye on the others who are bidding too to see who is eager for the home. Remember though, stick to your budget. It can be easy to get caught up in the excitement and bid more than you mean to, so it’s crucial to be disciplined.
7. Winning the Auction
If you emerge as the successful bidder, congratulations are in order! However, the process is far from over. You'll be required to sign the auction contract and pay the deposit immediately. Ensure you have your deposit money readily available to transfer.
Buying a home at auction can be a thrilling experience, but it demands careful preparation and a thorough understanding of the process. By following these tips, you can confidently navigate the auction world, and potentially secure your dream home when the hammer falls. Remember, knowledge, preparation, and discipline are your keys to auction success. Working closely with a mortgage adviser throughout the process can be a lifesaver, ensuring you're well-prepared for this crucial moment. Get in touch with our Queenstown mortgage advisors who can help you prepare to head to auction, ensuring you are pre-approved and ready to bid.