When you’re in the heat of the moment in the auction room, you need to call on your strategy to make the right decision. If you don’t have a strategy, you’re much more likely to make the wrong decision, and that could be financially disastrous. You could spend too much on a property in an otherwise very affordable neighbourhood, or you could bid beyond your means.
Before you step into the auction room and buy a house in the Redlands, it’s imperative you do your homework. Walk into the auction knowing what you want to buy, what you’re prepared to pay for it (and what you can afford), and how you should react not only to other bidders in the room, but also to the outcome of the bidding process.
One of the most important parts of buying at auction is knowing exactly what the property is worth. Look up what other similar properties in the same neighbourhood (or ideally on the same street) have sold for recently, and make a decision based on the home you’re looking at i.e. how modern it is or what work needs doing, plus take into account the advice of your property agent.
When you know what the home is worth, you can figure out if you can afford it. Talk to your mortgage lender and discuss options – if they say you can afford a bid of $800,000, make that your ceiling. The best option would be to bid far lower than that and save yourself a lot of money over time.
When the auction begins, you need to act efficiently. You don’t have to make the first, second or even third bid, but you will need to put your hand up at some point and it must be at the right time. If two people are going at it below your price bracket, wait until the bidding slows and one of them starts getting more tentative. Then throw your hat in the ring confidently and make it seem as if you’ve got a lot more room to move.
No matter how strong your bidding style is, the bid might not reach the reserve and the home might get passed in. This isn’t game over – it just means you’ll have to lodge an offer with the agent to buy the home. Your offer should still be within your budget, but at least you’ll know the highest bid was below the reserve. You don’t have to offer the reserve to buy the home, but the seller might be tempted to move if an offer is close enough. This is also where knowing what the property is really worth comes in handy.
Auction strategy is vital. Do your homework before you’re in the room and your chances of buying are greatly increased. For more information about buying at auction, get in touch with the Ray White Alexandra Hills Team today.