Essential must-knows before attending your first auction
If you're looking to buy property on the Gold Coast there's a good chance you'll be buying at auction. These sales are always high energy and a lot of fun, but it's important to avoid getting swept up in the excitement and remember what you're trying to accomplish.
For first time auction attendees, this can prove challenging, as it's all new and they may not know what to expect. To help these fledgling future bidders find success at auction, we've come up with five things you must know before attending a sale.
1. The nature of Auctions
The atmosphere at your average auction is absolutely electric. The auctioneers rapid fire pronouncements will excite the crowd, and tension will build as the bidders compete and the price escalates.
Entertaining as it may be, it's essential you know the nature of auctions before you attend. It's easy to get carried away in all the excitement and forget that the auctioneers purpose is to get a higher sale price for the vendor. To avoid this, set a limit for any property you bid on and stick to it. It may even be worth attending an auction before you buy to get used to the high-energy atmosphere.
2. If you bid be prepared to buy
It'll be tough to achieve the result you want at auction if you're not completely clued in on what's going on! First of all, when you win an auction you enter into legally binding contract and you must purchase the property if the bid is accepted – so take it seriously.
This means that once you place the winning bid you won't have the opportunity to take legal advice, arrange a mortgage, inspect the property or even negotiate terms.
3. The procedure
Prior to the auction, the auctioneer will announce the terms and conditions and state whether the vendor has named a reserve price ( they will not state the price, though).
Then the auctioneer will state whether or not vendor bidding is allowed – this is when the auctioneer places a bid to speed the auction up or move closer to the reserve price. If the auctioneer does make a bid, they must clearly state that it's a vendor bid.
Finally, bidding will continue until only one buyer remains. If the reserve price is not met, and you placed the highest bid, you may have a chance to negotiate a purchase price with the vendor.
4. Get your ducks in a row beforehand
Due to the nature of an auction it's essential to know what you're buying before you bid. This means you should have already carried out valuations, building inspections, pest inspections and all other necessary checks before attending the auction.
You'll also need to arrange finance, inspect the contract of sale and perhaps even seek legal advice, so that you can be sure you're ready to buy. If you're not confident you know what's required, get in touch with a local real estate agency and they'll point you in the right direction.
5. Your budget
Few things are more important when attending an auction than knowing your budget. Get your home loan sorted before hand and leave a little wiggle room for extra costs that could arise when buying property.
Make sure you set an upper limit and never exceed it, so that you don't run into financial strife when the sale is completed. Armed with a little knowledge and a solid game plan, it's possible to find a bargain Gold Coast property at auction.
Good luck out there!