Property auctions can be a great way to get a steal on your dream property, but the atmosphere is very competitive and cut throat. Before you get involved, you need to do your research and attend as many auctions as you can before jumping in. Here’s how…
Buying Auction Properties
Buying property at auction is a great way to get a steal on a property that you love. It’s also a very competitive environment where everyone wants to be a winner and he who bids highest wins. It’s an easy way to get your hopes up, only to see them destroyed. Before you get too involved in a property auction, do your research and follow the bit of advice imparted below to get what you expect out of an auction.
Do Your Research
It’s already been mentioned, but it really is that important. If you’ve never been to a single property auction before, do a lot of research. Make sure you know what you’re getting yourself into before you go in and have all your hopes crushed when you’re outbid on what looks like your dream home. Read books, check out websites and go to absolutely every auction that you can before you jump in head first and start bidding. The competitive environment isn’t for everyone, and it would be nice to know that before you put everything you have into auctions.
Watch For Under-quoted Properties
Agents routinely list their auction homes at about 20% below their actual value. They do it in order to get people to the actual auction, but this trap ends up with people spending money on inspections for houses they can’t possibly afford. Basically, if you can’t afford to spend 20% more than the price you see listed, walk away from the auction.
Be Ready For Competition
Auctions are always competitive, and everyone is there to win. Don’t get your hopes too far up, or you might see them crushed very quickly. You’ll often see bidding frenzies happen when someone’s too emotionally invested in a home, or when their ego won’t let them be beaten.
Don’t Forget The Horror Stories
There could be very serious problems with auction homes. They’re at auction because they didn’t sell for whatever reason, so you never know what you may run into when you finally do win the auction. It’s best to be prepared for anything.
Do your research on the area you’re looking into buying into. Check out the value and prices of homes that have recently sold, and pull up the information on comparable properties in the area. This can help you avoid overbidding. It’s not worth winning an auction if you’re just going to start out in debt with no chance of profit.
If time is a problem, or you’d like to have your research and figures double checked, consider hiring an experienced valuer. This costs a few hundred dollars on average, but could be well worth it by saving your thousands of dollars off your purchase price. Once you’ve figured out the value of the home, you can determine the point in the bidding where you will walk away from the bidding and look into something new.
If, for any reason, you doubt that you’re disciplined enough to do this, by all means have someone with no emotional attachment to the home to do it for you. It will prevent you from overbidding on the home and wasting a large sum of money.
Also, you need to be sure that you have all of your inspections done and the money already lined up when you buy at auction. There is no cooling off and any agreement to buy at auction is unconditional – once you’ve won the bid, there is no turning back. You can get a steal at auction, but you can also very quickly find out you’ve been taken. By following these tips, you’ll minimise your chances of losing money at property auctions.
This article was written by William from homeloanfinder.com.au. Visit HomeLoanFinder for a range of articles and guides on mortgages, property investment and home loan interest rates.