Buying Real Estate At Auction Tips

BUYING AT AUCTION:

Auctions can be a daunting time to buy a property as some Auctions you may not have any idea where it might sell or what it is worth. In New Plymouth we have adopted a policy of publishing the Auction Reserve in order for the whole process is transparent. We do about 60% of our Auctions this way. But in any case Auctions still are done in a set time frame and you need to have things sorted out so that you don’t miss out on your dream property at Auction. Here are a few things that will help you in your purchase at Auction. In Christchurch auctions are done in a more of a traditional way where auction reserves arent published and in many cases arent decided till a few days before the auction. Here is a quick run down on the things you should do when looking at buying a property from auction.

BEFOREHAND:

Do your Research

When you are looking in an area, whether buying ‘for sale’ or through an Auction, research the prices in that area for the type of property that you want. Find out about the good and bad features of the area, and comparative prices to other areas. Look at similar properties to the type that you are seeking.

Attend Local Auctions

It is valuable experience to attend as many local Auctions as you can to see how the Auction proceeds. Observe how people bid, and who is at the Auction. Work out people’s style of bidding. The same people may be bidding against you for your property in the near future.

Arrange your Finances

Ensure that you have your Finance in place prior to the Auction. Establish you bidding limit. Make sure you allow for all extra costs that may be involved and leave a buffer for bidding so that on the day you know exactly what it will cost you when your bidding.

WHEN YOU HAVE DECIDED ON THE PROPERTY:

Register your Intent with the Agent

Advise the Real Estate Agent if you are interested in a property. They will be able to give you more information on the property and guide you through some other things.

Establish your Bidding Limit

It is important that you set your own bidding limit. Decide what the property is worth to you based on what you can afford. Talk to your local mortage broker or bank for this as they can give you advice on repayments at any given cost.

Check the Paperwork

If you are seriously interested in a property and intend to bid you should have your Solicitor inspect the Contract of Sale. It is a good idea to have a good read through all the paperwork related to the Auction beforehand. Wherever possible, contact the Agent handling the sale and ask them to provide you with a copy of the documentation. This is normally possible in the week prior to Auction. Read through all of the documents and always ask if you are unsure of anything. It is important to clarify details such as settlement terms, deposit and fixtures before the auction commences.
Inspections

If you want a building and LIM inspections done do it before the Auction. It is not possible to make an Auction purchase conditional on inspection results. Make sure that any reports or inspections have been carried out to your satisfaction before you attend the Auction.

Ask for Help

Many people find the Auction process daunting. Don’t be afraid to ask a friend, relative or Real

Estate Agent, to assist you with your bidding. Many people ask someone else to bid on their behalf as they may be less inclined to bid emotionally and will not exceed a predetermined limit. Make certain that they have very clear instructions in writing on what they can and can’t do on your behalf.

ON AUCTION DAY:

Check the Contract of Sale again

On the Auction Day you should always check that your copy of the Contract of Sale is exactly the same as the original Auction Contract and that there have been no late changes.

Bidding

Remember how an Auction looks from the Auctioneer’s perspective. They are often looking at a large number of people who are invariably turning around, whispering etc. If you are standing at the back of this scene, or hidden in the shade of a tree, the Auctioneer may well miss your bid, particularly when you are bidding for the first time. Stand in clear sight of the Auctioneer and make your first bid obvious to them.

Make sure the Auctioneer understands what you are doing. Bid early, clearly and confidently, and avoid unusual sign language that may be misunderstood. Buyers are usually reluctant to start bidding at Auction but the best policy is to bid loudly and confidently signalling to all other bidders you intend to purchase the property or should the reserve price not be reached that you are given an opportunity in any further negotiations.

Keep Control of your Bidding

If the bidding is increasing in larger denominations than you are comfortable with, consider offering a lower denomination as your bid. The Auctioneer does have the right to refuse it, but there is absolutely no harm in trying.

It is important not to be drawn into a bidding war on a property you want. Emotion can lead to you payingmore than you can afford and there is no cooling off period with an Auction.

Making the Deposit

When the property is sold at the Auction you are required to sign the Contract of Sale and pay a deposit of usually 10% on the spot. This can be paid by Personal or Bank Cheque.

This information should be used as a guide. Always seek legal and professional advice when buying any real estate. Every situation is different so make sure your prepared. Enjoy the process and enjoy your new house if your buy one.