Home auction winning bid tips


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Home auction winning bid tips

Home auctions can be stressful even for experienced bidders. Plan carefully before auction day or you may risk paying more than you can afford or missing out entirely on your new home.

Before buying a new home at an auction, it is important to research the property extensively and make sure you know exactly what you are buyingi. Once you've done your research, develop a game plan for auction dayii. The following tips may help you beat the competition and win your ideal home.

Mortgage pre-approval from your bank lets you set your auction limit based on your borrowing potential and what you think the property is worth.

Finances

Before you decide to bid on a property, ensure that your finances are in order, such as a having a home loan pre-approvaliii. Approval from your bank means you can set your auction limit based on your borrowing potential and what you think the property is worthiii,iv. You don't want to end up paying more than you can afford, even if you are set on a particular homeiv. Prior to auction day, you may need to consider building inspections so that you know the property is up to scratch and that there are no nasty surprises once you've bought it. Also consider what other ongoing expenses need to be factored into your budget apart from mortgage repayments such as rates, home insurance, maintenance and utilities.

Ask questions

Before the auctioneer starts the bidding process, ask questions publicly about topics that unnerve the oppositionv. Auctioneers are obliged to answer these questions before the auction begins, so asking the right type of questions may cause other bidders to hesitatevi. These can include asking about issues such as nearby developments or special leviesv.

Confidence

Confidence helps in a home auctionvii. Positive body language and gestures as well as bidding assertively will let other bidders know how determined you are to acquire the propertyiii,v. You should also state the full price of your bid so other bidders know exactly how much money you are willing to spend on the propertyv. For example, saying $520,000 sounds like a lot more money than simply $520. A confident attitude can give an edge to your bidding and may make other bidders drop out earlieri,iii.

Stop

Preparing for auction day can help you get your new home.

Know when to stop bidding. It's easy to be caught up in the emotion of an auction but stick to your pre-auction limit otherwise you may end up committing to more than you can afford. If you think you will be caught up in the moment, consider sending a representative in your place such as a friend, family member or buyer's agent on your behalf. Buyer's agents are an additional cost but since they are not emotionally invested in the property, they can make level-headed decisions and stick to your pre-auction limitvii. When setting this limit, don't settle on a round number since a small difference in price can be enough to win many auctionsviii; for example, committing to $905,000 rather than $900,000 is preferable as the extra $5,000 might be the amount necessary to get you your dream home.

Be realistic

Don't stress if a particular auction doesn't fall your way - there will be another home to buy. If someone has more money than you and is willing to spend it, then no amount of strategy and planning will helpix.


iWellings, S 2011, 'Formulas for success', Domain, 5 February, viewed 3 December 2014,
http://news.domain.com.au/domain/home-investor-centre/formulas-for-success-20110204-1ag97.html

iiDuke, J 2014, 'Five tips to win at auction, and how to know when to walk away', Property Observer, 6 February, viewed 3 December 2014,
http://www.propertyobserver.com.au/finding/location/nt/28675-5-tips-to-win-at-auction-and-to-know-when-to-walk-away.html

iiiHSBC Bank Australia 2014, Tips for Auctions, viewed 3 December 2014,
https://www.hsbc.com.au/1/2/personal/home-loans/buying/steps/tips-auctions

ivYardney, M 2007, '5 tips to buying well at auction', Real Estate Australia, October, viewed 3 December 2014,
http://www.rs.realestate.com.au/review/oct072/auction-tips.html?from=review

vDevine, A 2014, '11 Auction Tactics To Knock Out The Competition', Your Investment Property, viewed 3 December 2014,
http://www.yourinvestmentpropertymag.com.au/buying-property/11-auction-tactics-to-knock-out-the-competition-118049.aspx

viReal Estate Institute of Australia 2014, A Career in Real Estate, viewed 3 December 2014,
http://reia.asn.au/training/a-career-in-real-estate/

viiSweeney, N 2014, 'How to win in an auction', Your Mortgage, viewed 3 December 2014,
http://www.yourmortgage.com.au/article/how-to-win-in-an-auction-78855.aspx

viiiBoyd, C 2010, 'Learn how to swoop on your dream nest', Domain, 18 September, viewed 3 December 2014,
http://news.domain.com.au/domain/home-buying-tips/learn-how-to-swoop-on-your-dream-nest-20100917-15fov.html

ixEdwards, L 2014, 'How to win an auction', Domain, 1 November, viewed 3 December 2014,
http://news.domain.com.au/domain/real-estate-news/how-to-win-an-auction-20141001-10ofum.html