Home Auction Tips For Buyers
Due to recent increases in value of the Melbourne property market, auctions may be the only way buyers can secure a property asset. When there are more buyers than there are available properties, realtors know that auctions are the most effective way to maximise return on investment for their clients. However, just because auctions are highly unpredictable and emotionally-charged, it doesn’t mean buyers are necessarily obliged to pay too much. In this blog post we outline several auction tips for buyers that can help them to win without overspending.
Pre-Auction Tips For Buyers
Have a plan: Estimates state that approximately 5% of buyers don’t have a plan. Work out how much you are prepared to bid, how you are going to bid and whether you will hire someone to bid on your behalf.
Set a ‘stretch’ budget: Some realtors endorse a stretch budget up to 5 per cent above the property’s value if the buyer is going to be an owner-occupier. A 3 per cent stretch budget is recommended for investors. In a market that is increasing in value, consider the quality of the property, it’s rarity and the chances of another similar property coming to market in the next 12 months. These factors should give indications of how necessary a stretch budget is during auction.
Establish a hard limit: It’s important to set a hard limit because taking five minutes at an auction to discuss if you can pay more demonstrates to an auctioneer that you are at breaking point. They might therefore be inclined to push other buyers to outbid you. Knowing when to stop bidding and find another property is important in terms of not overstretching yourself.
Prepare your checklist: Items you will need in preparation for your bidding include finance preapproval, a contract reviewed by a lawyer, proof of building inspection, negotiation of terms and deposit payment and a final check-in with the agent responsible for the property to prepare for competition and ask questions about the vendor’s reserve or expectation.
At Auction Tips For Buyers
Be the first and last bidder: It’s recommended that buyers bid first and bid quickly. You don’t want to feel under pressure during an auction. If you bid quickly, you put other buyers under pressure. It’s also worth keeping in mind that you don’t have to go up in big amounts either. Auctioneers can always reject a bid, but if they’re asking for $20,000 increments, it’s worth trying an increase of $10,000.
Listen carefully to the auctioneer: Do not under any circumstances chance having your bid missed after the final call. The auctioneer won’t accept late bids.