In Auctions, you can determine the purchase price through competitive bidding. By doing this, you know you are negotiating fairly and on the same terms as all other buyers while you all openly compete with one another.
However, there are a few important things to bear in mind and steps to follow, to ensure you are 100% prepared for auction day as a buyer. Here are a few guidelines to follow:
- Do your homework: start attending auctions as an observer - this will give you a better understanding of the auction process.
- Ask questions: if you're unsure of how the auction process works, ask your real estate agent for advice.
- Make sure all the t's are crossed: have your solicitor examine the Contract of Sale prior to the auction to ensure everything is in order. Also have any building and/or pest inspections carried out prior to auction day.
- Get your finances in order: you should know exactly how much you can spend on auction day - and, most importantly, you need to stick to your limit on the day. If you're the successful bidder, you will be required to pay a deposit on the spot, usually 10% of the purchase price - so make sure you have the funds available.
- Register to bid: if you register with the company prior to auction day, the agent will be able to keep you informed of progress during the marketing phase leading up to the day.
- Come prepared: on auction day arrive at the auction venue early, with cheque book in hand. Position yourself so you are close to the auctioneer, but have a clear view of other bidders also. When you are ready to bid, do so with confidence. However, if you don't feel confident about bidding, you can hire a buyers' agent to do the job for you. Ask your real estate agent for advice in this regard.
- Going once, going twice...: if yours is the successful final bid, congratulations! You will then be required to sign a contract and pay your deposit immediately. The balance of the purchase price will be paid on settlement.
If, however, you are not successful this time round, keep in mind that there will always be other properties to choose from. Also, remember if you really want a property but don't want to bid at the auction, you could try to make a pre-auction offer through the selling agent. Some vendors will prefer to see the auction through, but others may be willing to negotiate.