How to Prepare for a Property Auction
You need to prepare before buying a home at auction. Try to go to a few auctions first to see how they work. There is no cooling-off period for buying at auction. If you are the successful bidder at the auction, you will have to settle the contract even if the house doesn’t pass inspections or if you change your mind
1. Before the auction
Before the auction, make sure you inspect the property, arrange your finance, get a property valuation, do research of the market and get legal advice about the terms and conditions in case you’re the successful bidder.
IMPORTANT:
It’s illegal for a seller or their agent to give you a price guide for an auction property. This is because they cannot know how high the bidding will go. A property may appear on a listing website when you search by price. This is only for the purposes of the web search, and is not designed as a price guide. Sometimes, an auctioneer may offer you a comparative market analysis. This is a document that offers you information about what similar properties have sold for in the same area. They can only give you this document with the seller’s approval.
2. At the auction
Set a budget before the auction and stick to it. If you are the successful bidder, you will still have to settle the contract.
3. Know what to bring
If you wish to bid for a property, you will need to register. A registration desk is typically set up at the entrance of an auction, where real estate agents can answer any last-minute questions you may have and assign you a bidder number. You will be required to provide identification such as a driver’s licence or passport to register for an auction.
4. Auctioneer responsibilities
An auctioneer must have a current and valid licence. An auctioneer licence is the only type of licence that permits a person to auction real estate. Auctioneers will need to either display their name prominently at the site of the auction or announce their name at the start of the auction. They need to announce the conditions of sale that might include the required deposit, inspection details or any other relevant details.
5. Reserve price
The reserve price is the minimum sale price that the seller will accept. The seller sets the reserve price in writing with their agent before the auction. A seller doesn’t have to set a reserve price, but most will choose to have one. The auctioneer is allowed to tell you whether or not the seller has set a reserve price. However, the auctioneer must not tell you the reserve price itself. Once the reserve price is reached during bidding, the property will be on the market.
6. Be a confident bidder
It is a good idea to arrive early to see how the auction room is set up and secure a position where you can be easily seen by the auctioneer. Placing confident bids is also recommend as it will help give other people the impression that you are serious about the property. Being a confident bidder also means that you speak clearly and loudly, have open body langue and try to bid in larger increments.