You're on a budget, waiting for the right place to come up, and finally it hits the market. The asking price is right on your limit but the auction is coming up and you really, really want the property. Your best bet is to head along and see if you can snap it up for even less than you've budgeted for.
Buying a home on the Gold Coast at auction can help you to get into your dream home, even if that home is a little out of reach on paper. When a home is on the auction block, lots of preconceived ideas about what the seller wants and what people in the room can afford go out the window. That's where you can strike.
What's different about buying at auction?
When you're in the auction room, it's a competition for the highest bid. That doesn't mean you have to have the most money necessarily, but you do need to know how to bid. Even if your 'rivals' have more, they won't know what you can afford. Bidding confidently and quickly might make them back away if they don't think they can top your offer.
Once you bid, you're in the race. If the leading bid goes above the reserve price set by the seller, it's game on. Whoever finishes with the leading bid from this point is the proud owner of a new home! Be careful in this situation though, because there's no cooling-off period at auction like there is in a private treaty sale.
Buying a property via a private treaty might mean you get five days to change your mind. If you win the auction, that doesn't apply – you are the owner of the property, and you must front with the finances. Knowing what a property is really worth is vital here, because in the heat of the moment you could bid well above the value of the property, then be left as the leading bid. Not ideal.
Strategy plays a big part on the auction floor
You only have so much money to work with, and you certainly don't want to bid way too much for a property (even if it is your dream home) because that's a bad financial move. Instead, you must enter the bidding war at the right time, and respond to your opponents confidently to give them the idea that you have more wiggle room.
If they suspect you could continue outbidding them until they blow past their budget, they may pull out of the race early. On the other hand, if they think you're taking too long to counter-bid and you're not increasing by much, they'll believe they can beat you and keep pushing back.
The property you're bidding on is your family's next home. It's potentially the place you'll raise your kids, or it's your first investment home. It's important that you get the bidding strategy right from the get-go, otherwise you're unlikely to walk away with what you want. A property agent will be able to help you prepare before an auction, and inform you about buying post-auction too.
You must have your finances organised
It's imperative you know how much you can afford before you enter the auction room. Speak to your bank or mortgage broker about your maximum amount and under no circumstances exceed that.
Even if you don't end with the leading bid, if the property is passed in (i.e. it didn't reach the reserve) it's still technically for sale. You can lodge an offer with the seller in a private treaty scenario to attempt to force them to sell on the day. If they really want to wind the selling process up, they might budge from their reserve price. It can't hurt to ask!
Buying at auction is a totally different beast. For more information about getting ready for your first auction, contact the team at Ray White Surfers Paradise today.