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Sold! How to prepare for buying a home at auction

Sold! How to prepare for buying a home at auction

September 8, 2010

Buying a home at auction can not only be an exhilarating experience but it can also be a great way to nab yourself a property at a great price. Unlike other ways of buying property, buying at auction can offer other benefits, such as greater buying opportunities, an immediate result, a prepared mortgage, and unlike private sales you always know what the offers are.

If you are thinking of purchasing a property at auction, here are some tips on how to better prepare yourself both before the event and on the actual day, so you can own the home of your dreams sooner.

Before the big day

  • Finances. One of the most important things you need to do is arrange pre-approval of your finances before the auction. If you are the winner, you may need to write a deposit cheque on the day. You will need to compare home loan deals and get pre-approval at least two to four weeks before the actual auction.
  • Compare home loans online to find a mortgage with a low interest rate and low fees so you are ready on the big day.
  • Experience. Consider visiting other auctions before you start bidding so you can get a feel for how auctions work and observe the different bidding strategies.
  • Set yourself a limit. Do some research on the prices of property for sale in the area you are considering, to get an idea of what price the vendor has in mind. Also work out how much you can afford to pay and set yourself a limit and don’t go over it.
  • Changes to contract. If you require a longer settlement period or anything else that will mean amending the contract, make sure you speak to the agent and ask for this in writing in case you win the bid.

On the day of the auction

  • Start low. If you are the one starting the bidding, make sure you start low. If you start it too high then you may have less chance of it selling within your budget.
  • Confidence is key. When making a bid, make sure you say it fast and try not to hesitate as this could come off to your competition as a sign of weakness. You want them to see you as confident no matter what your limit is. Try not to let your feelings show or they could use this against you.

The most important thing to remember is to stick to your limit and don’t exceed it. If you are outbid, don’t be disheartened as it just means that there may be something else better around the corner.

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