8 Tips for Your First Auction

22nd May, 2024 | Articles, First Home Buyer

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Auctions can be an exhilarating way to acquire properties, but they can also be overwhelming if you're not experienced or prepared enough to navigate them successfully.

Auctions can be an exhilarating way to acquire properties, but they can also be overwhelming if you’re not experienced or prepared enough to navigate them successfully. 

Whether you’re a first-time home buyer or a budding property investor, these tips will have you confident and ready to make informed decisions that will secure your dream property.

Auctions are a great tool for the property investor if approached in the right way. You need to develop your skills so you can be confident attending auctions if you’re going to maximise your chances of getting the property you want.’ – Mark Bouris

1. Do Your Research

Before attending an auction, it’s crucial to conduct thorough research. Start by familiarising yourself with the current property market trends, particularly in the area you’re interested in. Look at recent sale prices, property values, and market forecasts. This will give you an understanding of the market conditions and help you set a realistic budget.With a quick search, you’ll be able to find free property reports that give you a detailed look at the value of properties in the area that you’re looking to purchase in. 

 2. Attend Auctions as a Spectator

Before actively bidding, attend a few auctions as a spectator. This will give you a feel for the process, allowing you to observe how other buyers and investors navigate the auction environment. Pay attention to the bidding strategies and tactics employed by experienced participants. Familiarising yourself with the auction dynamics will boost your confidence on auction day.

3.  Seek Professional Advice

Consider engaging the services of a qualified real estate agent, broker or buyer’s advocate. These professionals have extensive experience in property transactions and can provide valuable insights. They will guide you through the entire auction process, from property inspections to bidding strategies. Relying on their expertise will help you make informed decisions and increase your chances of success.

‘When you engage with skilled professionals, you take advantage of years of experience and knowledge – it makes sense to take advantage of that if you really have the drive to succeed.’ – Mark Bouris

4. Inspection and Due Diligence 

Before bidding at an auction, thoroughly inspect the property. Take note of any structural issues, maintenance requirements, or potential renovation costs. Additionally, obtain a building inspection report and review the title deeds. Understanding the property’s condition and legal status will give you an advantage during negotiations and prevent any unpleasant surprises later on.

5. Work out your Budget and Get Pre-Approval 

Determine your maximum spending limit and stick to it. Consider additional costs such as stamp duty, legal fees, and building inspections when calculating your budget. Knowing your financial boundaries will prevent you from getting caught up in the excitement and overspending.

Get pre-approval. You don’t have to get pre-approval to register for an auction but it certainly makes a lot of sense. This is because auction sales are unconditional – once your bid is accepted you can’t withdraw your offer so, if your loan doesn’t come through, you might lose your deposit. 

It ensures your money is ready and waiting for that deposit when your bid is successful, and just gives you confidence in the bidding process.

6.  Set a Bidding Strategy

Develop a clear bidding strategy based on your budget and market research. Determine your initial bid and the increments you are comfortable with. Maintain a confident and assertive approach while bidding, but avoid getting caught up in emotional bidding wars. Remember, sticking to your predetermined limits is crucial to staying within your financial boundaries.

‘Auction success is about all the work you do before you turn up. Set your strategy and stick to it.’ – Mark Bouris

7. Remain Calm and Confident

Auctions can be fast-paced and intense, but it’s essential to remain calm and composed throughout the process. Buying a home is intensely personal so your emotional attachment to the property you’re bidding on can get in the way on the day – stick to your bidding strategy and stay focused on your goals to avoid making impulsive decisions. Trust in the research and preparation you have done and trust your instincts when it comes to making bids.

8. Be Prepared for Competition

Auctions can attract multiple bidders, so be prepared for competition. But don’t let this discourage you. Instead, view it as an opportunity to gauge market demand and adjust your bidding strategy accordingly. If you miss out on a property, remember that there will always be other opportunities in the market. And remember, whether you purchase at auction or through another process, there will always be other competing offers on a property, so accept competitors as part of the process and don’t let their presence dictate your actions on the day.

Going, Going, Got it!

Participating in auctions as a home buyer or property investor can be an exciting and rewarding experience. By giving yourself the time to take these practical steps and to prepare yourself mentally for the experience, the auction process can open a new range of potential properties for you. It’s just another step in the property investment journey.

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