Here at Clarence Street Mortgages, we very much enjoy hearing the stories from our clients of their latest bidding war. The thrill of buying at an auction can certainly be a rollercoaster ride of emotions with unfortunate pitfalls along the way. One of our most commonly asked questions are: “What can I do to ensure I have the winning bid?”
In that regard, we’ve gathered a few supportive tips that every bidder needs to know.
Attend at least 12 other auctions
It will take at least this many auctions to familiarise yourself with the process, the emotions and atmosphere. It can help with understanding terminology like “reserve” and “vendor bid,” “on the market’ and “passed in.”
Have your finances pre-approved
If you win you will need to have the deposit ready to pay straight away. Financial pre-approval is also a good idea because it gives you a clear idea of your borrowing power and helps you set your bidding limit. As your mortgage broker, we can handle this entire process for you so when the time comes, you’ll be ready.
Make a limit that reflects the property’s market value
Avoid the dreaded “winner’s curse” and set a pre-determined maximum ‘walk away” price you are willing to pay and make a resolve to stick with it. The price should be a fair reflection of what you feel the property is worth based on the research you have done of recent sales in the area and the prices of similar properties that are up for sale.
Set your maximum at an odd number because if two people have the same limit, which is more than likely to happen on a round number, then the first one to get there can buy the property.
Have a solicitor/conveyancer go over the sale contract
Once the hammer has dropped, it is taken that you accept the sale contract in its current form. There is no cooling off period – when the contract is signed you are committed to buying the property. For this reason it pays to have a solicitor/conveyancer review the contract and any amendments you wish to make (such as the amount of deposit, settlement period, inclusions) need to be agreed by both parties prior to the auction. If you are unsure of who to turn too, we can definitely help you with this stage.
Don’t scrimp on inspections
If you are really serious about this property, you should consider having it inspected by a licensed building and pest inspector prior to the auction.
Be assertive when bidding
Bid with confidence because you know that provided you follow the above steps you are as ready as can be.
For more information on our Mortgage Broking service or for more useful tips call us on 02 9299 7044.