Afraid of buying a house at auction?

by Prime Estate

Well, you’re not alone! It turns out that approximately one in five Australians are too.

Auction anxiety can come from the pressure of public bidding when all eyes are upon you. You may be scared that you’ll pay too much or lose control in the process.

And is it any wonder? A typical auction only lasts 10 minutes! Having to think on your feet in a short and fierce battle with large financial stakes on the table – namely yours – can just be way too stressful!

But with 20-30% of house sales in Melbourne and other main Australian cities going under the hammer, avoiding auctions can mean missing out on a dream home or a great buy.

Auctions provide another key benefit too. Apart from the sales process usually being much quicker, they provide a much more transparent transaction than buying a property through private sale.

Agents do not disclose the last best offer they received on a private sale. This is because they are working for the vendor because that is who is paying them. This puts you at an immediate disadvantage. As you can’t see anyone else’s offers, yours could be well above the last best offer and well above what the vendor was hoping to receive.

At auction, however, you’re able to compete fairly and on the same terms as all other buyers. That’s because all offers are out in the open, placing you in a clear position on exactly what the market is willing to pay.

There are also some simple ways to overcome a lack of confidence at auction and turn that sense of fear and anxiety into the thrill of a chase! Here’s how we arm our clients so they are in control of the full auction process.

1. Be informed

Learn about comparable sales in the area – types of properties sold in the area, sales on the same street, average sale prices and other information or data that can give you a clear idea of how much this property is likely to be worth.

2. Know your budget range

Knowing exactly what you can afford and what your walk away price is will help you negotiate and not go beyond what you can afford.

3. Get to know the agent

Ask the agent for advice about property sales in the area, past sales, the vendor’s circumstances, what they know about the property, an indication of the reserve price, and what terms and conditions might be negotiable.

4. Review the contract

Have a professional review the contract of sale prior to making any offer. There are many ways clauses in a contract can lead to unforeseen expense or even restrictions on your plans for the property or land. These can come in a variety of forms too: caveats, easements, zoning, development restrictions and more. A professional will make sure there is no limit on the future potential of the land or your enjoyment of the property.

5. Know if you want to make an offer prior to auction

There are some great deals to be had at the moment however good due diligence and strategy still apply.

*Insider Tip

If you are going to make an offer consider having a dated deadline on your offer, and definitely do not call the agent during this time to “see how it’s going”.

We believe the main reason people get auction anxiety is because they are under-prepared going in. The due diligence process is paramount when it comes to securing a property at the right price and information is power! It’s the difference between being excited at auction because you have a strategy and being plagued by doubt from all the unknowns.

By arming our clients with as much information as possible so they can make informed decisions, we remove the fear and add the excitement!

And if you’re still not convinced and think that auctions just aren’t your cup of tea, a professional buyer’s agent can be the way to go. We do all the heavy lifting for you:

triple checking data, researching the market and conditions, providing a selling range and walk away price, negotiating with the agents, and acting for you at auction.

When you work with a buyer’s agent, you get an advocate that works only for your interests. We’ll bring a wealth of experience, market and property knowledge and pre-existing relationships with agents. That puts you in a stronger position and opens up your property options so you never have to miss out on another great buy at auction!

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