If you are in the market for your very first home, you are probably a novice when its comes to the art of the auction.
Let's be honest, auctions can be daunting, overwhelming and emotional experiences. But if you play your cards right and keep your cool, they are a great way to purchase your new home - at an affordable price.
Here are our tips and tricks on getting yourself auction ready!
Test the waters.
Don't let your first bid come at the same time as your first auction. This is like expecting a birdie before you've even made a par (one for the golfers out there). You need to find your feet first - attend some auctions, familiarise yourself with the process, and soak in the atmosphere. This will help to reduce the fear of the unknown, and make you more confident when your dream home finally comes under the hammer.
Do your research.
Know the true value of the house. Look up similar properties in the area, and see what they have been selling for at auction. If there is a high likelihood you will buy the house, consider getting an independent valuation beforehand. This will ensure you're not tricked into believing you have snatched a bargain, when you've actually paid much more than the house is worth.
Don't let the agent know your intentions. Their job is to sell the property, and many are not above hoodwinking potential buyers to do so. If you use phrases like 'dream house', and 'the one', you are playing right into the agent's hands. They will shape the auction in a way that will evoke your emotions- and unfortunately, dummy bids can still exist. Avoid showing excitement, and master your poker face. Remember, the agent has played this game many times before.
Know your limit.
This is perhaps the single most important thing to remember when bidding at an auction. Discuss your finances with your broker prior to the day, and they will help you arrange pre-approval with a lender. Keep your upper limit private (certainly don't tell the agent), and in no circumstances should you exceed this. The auction sale is unconditional and you will be obligated to come up with the full purchase price. So if a lender can't offer a larger loan, you will have to source the funds else where. This can place you in a real financial pickle. Moral of the story? Know your limit, and stick to it.
Even if you're not. Confidence can intimidate other potential buyers as they believe you mean business. Dress to impress in order to project an air of affluence. If your competition thinks you have a lot of money, they may be scared off bidding early. Announce your bids clearly, and without hesitation- you know your limit after all. If the agent senses doubt or weakness, they will try to play you like a fiddle.
Remember, there's always another 'one'.
It's all too easy to walk through a beautiful house, get all emotional and decide you've found "the one". The issue is, this emotional attachment may tempt you to bid above your limit on auction day. Keep a calculated perspective, and don't let yourself think of it as 'the one' until the hammer drops and you're the highest bidder. Until then, there are plenty of other houses out there that are just as perfect, if not better.
Disclaimer: The advice provided in this article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. We encourage you to consult a finance professional before acting on any advice provided in this article or on this website.