Auctions can simultaneously be an exciting and daunting experience. While you may feel nervous amidst a chattering crowd, there’s no denying the surge of adrenaline each time you bid. However, there’s also the risk of overbidding in the thrill of outbidding the competition. But that usually happens when you walk into an auction unprepared. The key to succeeding at an auction lies in preparing yourself mentally, emotionally and financially for the event. If you’re wondering where to start, we have for you these 6 tips that will help you bid confidently at an auction.
1. Get a home loan pre-approval
It’s recommended to have a home loan pre-approval before you visit an auction. Getting pre-approved for a home loan helps you in two ways. First, it gives you an idea of how much you’ll be able to borrow, which can make it easier to bid confidently, as you already know your limit.
A pre-approval also makes you look like a more serious buyer. Even though a pre-approval is conditional, it indicates that your finances are in order as the lender has already gone through your documents before pre-approving you for a mortgage. You must also keep your deposit ready on the day of the auction, as you’re required to pay it upfront if you make the winning bid.
2. Find some data to set a limit for yourself.
It’s always a good idea to check for comparable sales in the neighbourhood to justify the vendor’s price. Knowing the market price of a property also helps you bid more confidently. Some experts believe your opening bid must always be closer to where you want to end. Since most buyers are aware of the property’s market value, bidding close to this figure can help eliminate a lot of low bidders.
3. Visit several auctions before bidding at one
It’s a fact that auctions can be stressful, especially for someone new to the process. But you can prepare yourself mentally by visiting several auctions before you decide to bid at one. This will help you understand how the process works and get the hang of the jargon, so you don’t feel out of your depth when you attend your first auction as a buyer.
4. Stay calm
Staying calm at an auction is easier said than done. But there are things you could do to keep yourself cool. For instance, if you follow the tip in the previous point and attend several auctions, you’ll soon find yourself at ease in the high-pressure environment. Some people also prefer to arrive early at the auction site to survey the area and see who’s present there. If you choose to arrive early, it could give you some time to speak with the seller’s agent and other buyers, which might make you feel at ease. If you still feel nervous, you could always ask someone else to bid on your behalf or engage a buyer’s agent to attend an auction with you.
5. Get expert help
Before any property auction, it’s worth getting a copy of the sale contract and showing it to a lawyer or conveyancer toreview. A legal professional can advise you of the risks that come with the property and how you can protect yourself.
It’s also vital to get a professional building report to find out any potential issues with the property before the auction starts. Remember that most auction sales don’t come with a cooling-off period. If you discover a defect in the property after winning at the auction, there’s not much you can do about it. A professional inspector can save you from such a situation by looking beyond the property’s aesthetics to unravel any damages or defects that could be a safety hazard in the future.
6. Leave no room for emotion
If you’re thinking of buying a home at an auction, it’s vital to eliminate emotion from the equation. Despite all the preparation and planning, there’s always a chance of missing out at an auction if you stick to your ‘walk-away’ price. However, it’s not something to feel sad about. It’s always wise to not over-bid and commit to a property that you cannot afford.
You can use an online calculator to determine the amount you can borrow for a home. It also helps to calculate your monthly repayments to determine the size of the loan you can comfortably repay. This amount should be your ‘walk away’ price in any auction to prevent you from over-bidding and landing in trouble later.