What does bidding at an auction involve?

March, 2017 by

An auction is an increasingly popular way for a buyer and seller of a property to achieve fair market value. In fact, in the middle of March, the combined capital city clearance rate was 80.8%, which is a strong clue to how this method of sale is being embraced across the nation.

The two largest auction markets, Melbourne and Sydney, saw their preliminary clearance rates rise, with Sydney at 83.1% and Melbourne at 84.3%, while the highest clearance rate was in Adelaide where 87.0% of auctions cleared in the middle of March, according to CoreLogic. One year ago, the combined capital city clearance rate was a lower 64.9%.

Focussing on the auction bidder, if you decide you are interested in buying a home under the hammer, let the real estate agent know, so that you can be kept abreast of any movements – such as an early offer for the home – prior to the auction.

Likewise, seek some legal advice, if you are seriously interested in a property. Ask your solicitor or conveyancer to inspect the ‘Agreement for Sale’, which will be held by the auctioneer. Your legal adviser may suggest making additions or variations to the agreement. These changes can be negotiated between the legal representatives of both parties and, if the amendments are agreed, the contracts can be revised.

As part of your own preparations, attend as many auctions as possible to get acquainted with the process. At the same time, don’t leave anything to chance and get a building and pest inspection report on a property you’re serious about buying.

It is essential you take the time to do your research and have a sense of the potential value of the property in your sights. It is possible to compare real estate values in the area by monitoring websites such as the industry leading www.rh.com.au. As part of your research regimen, ensure you know when the home is available for inspection – and whatever you do, don’t forget to pencil the auction date into your diary.

Before attending an auction, it’s critical that your finances are in place. The winning bid at an auction is a binding contract and, so if you are successful, your finances must be in order. To make sure you’re financially ready, contact your lending institution or a mortgage broker such as Our Broker for finance approval. This way you’ll know your borrowing capacity and you can set your financial limit for the auction accordingly. You will need a written loan approval before the day of the auction, as well as a deposit, which is usually 10% of the purchase price.

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