When it comes to buying a property at auction, one of the most common things you’ll hear is this: Do your homework. This makes total sense and anyone committing to any kind of real estate endeavour will know that there must be sufficient preparation beforehand. So, what does doing your due diligence and collecting research before auction day actually consist of?
Inspect the site. Thoroughly.
Let’s say a few homes for sale on the street have caught your eye. Naturally, you’ll wander in and take a look at these properties. The important thing here is to be absolutely vigilant when inspecting them. The vendors would have prepared their homes in such a way that most viewers will see what the sellers want them to see.
However, Australian laws indicate that once the hammer strikes, the home is unconditionally yours to own – for better or worse. This means that even if you suddenly realise that there’s a fist-sized hole in the ceiling, you can’t pull out, negotiate down the price or have the vendor pay for the damage. You are legally obliged to complete the transaction. So during an open home inspection, be sure to look around every nook and cranny available.
Registering your interest
Found a home that your heart is set on? In these circumstances, it’s imperative that you register your interest with the agent. This way, you’ll be notified if the auction date is brought forward. Don’t forget to ask the agent if the vendor is actually considering offers before the auction.
If the answer is yes, then this is even more important as you’ll want to be notified of any offers that other buyers are making pre-auction. You definitely don’t want your dream home to be snatched from right under your nose without getting the chance to at least counter-offer.
Studying the suburb
Before going to a home auction, you’ll always want to know what kind of price point you might be working with. While the capital value of a home or the expected price an agent advertises can shed some insight, they’re not always accurate. Furthermore, the reserve price of a home is not known to anyone except the vendor and agent, and will need a bit of well-informed guesswork to forecast.
Have a look at other homes in the neighbourhood and see what prices they’ve sold for recently. See if you can find properties that share similar features like size and bedroom counts to get a rough indication on what the one you’re after could sell for.
Sorting out your finances
Before auction day, you’ll want to have a loan organised and pre-approved. If the hammer falls and you win the auction, you’ll need to pay the deposit immediately. If you’re buying real estate in Australia or New Zealand, this figure is usually 10 per cent. Then, once the rest of the balance is paid off, the sale is finalised.
Ensuring that your finances are handled before the auction will allow you to bid with peace of mind and avoid any potential legal issues.