Nothing quite beats the atmosphere of a property auction. Numbers flying around the room and paddles waving furiously — exciting stuff, right? But with plenty at stake, it’s important to remember there’s lots to consider when purchasing property this way. There is no cooling off period at auctions, so if you’re the successful bidder on the day, you must settle the contract regardless of whether you change your mind or struggle to arrange finance later.
We’ve listed our top tips for staying calm and collected on auction day, so you don’t get caught out amongst the excitement.
It’s recommended that you get your finances pre-approved prior to auction. Remember, if you secure the winning bid on auction day, the sale then goes unconditional, and you’re legally required to go through with it even if the bank later declines your request for finance.
If you don’t know where to start, a mortgage broker can help connect borrowers with lenders so you get a loan best suited to you.
A deposit will need to be paid on the day and that’s usually 10% (although this can vary). These funds need to be cleared, ready to transfer — so check your daily EFT limit is appropriate.
Organising your finances and documents are one thing, but make sure you’re prepared mentally and emotionally before you start bidding. If you haven’t attended an auction before, go along to some prior so you can get a feel for the atmosphere and the proceedings.
You’ll need to have the contract of sale reviewed by your solicitor or conveyancer and complete any building and pest inspections prior to auction day. Again, there are no ‘refunds’ if you’re the winning bid, so if you later discover the property to be riddled with termites that’s a cost you’re going to have to take on yourself.
Have a strategy for how you will bid on the day, but if you’re new to auctions, try to avoid any tactics that are out of your comfort zone. Bid confidently, speak clearly, and keep a level head.
If you have a pre-approval, you’ll already know the maximum amount you can bid. Once you have that figure, it’s important that you stick to it.
Remember, there are a number of costs associated with buying a house. Everything from legal fees to the cost of a removalist needs to be considered, so make sure you allow enough wiggle room in your budget to cater for costs across the entire property sale journey.
The state you’re in will determine whether you need to register as a bidder. Be sure to bring along important forms of ID like your driver’s licence — this might seem obvious now, but auction day nerves mean you can forget the simplest of items.
If you’re selling and in the market for a new home, we can pre-approve an auction deposit facility for you so that you can bid with confidence on auction day.
Property Credit gives you access to the equity in the property you’re currently selling. This gives you the freedom to start looking for your next property, even if your current property is yet to settle!
Visit property.credit for more information on our services or you can contact us on 1300 829 536 (au) or 03 668 2144 (nz).
This article is for general information purposes only and is not intended as financial product advice. Consider seeking independent financial advice that relates to your individual circumstances.
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