Tags: Tips, Calculator, HomesMarket Update | 31.05.13

What you should know before buying a house at auction

The auction process is full of pitfalls for the unwary. Here are some of the things you should know before you buy a house at auction.

Do your research

Research properties in your preferred area to get a general idea of what a ‘reasonable’ bidding price might be. Attend a few auctions in the area so you’re aware of the process, how popular the area is and how high bids tend to go. You could also invest in a private valuation of the property you think you’d like to buy.

Pre-auction Preparation

Visit the real estate agent, register your interest and get a Contract of Sale and condition report for the property you are going to bid on. Read them over then get a solicitor to double check for you.

Get building and pest inspections done before the auction – because there is no cooling off period at auction you cannot buy a property conditional on positive inspection reports.

Organise your finances – have your deposit available, work out how much you can borrow and set a firm bidding limit. With our home loan calculator you can get a good idea of how much you can actually borrow. Factor in additional costs like stamp duty, legal fees, mortgage costs etc when calculating the ‘cost’ of your mortgage and monthly repayments. Consider the possibility of rising interest rates to ensure you do not go into mortgage stress.

The big day

Place yourself so the auctioneer can see you clearly and make clear and confident bids using pre-determined tactics. Do not bid more than you can afford – you might want to consider having a professional bidder so you avoid going beyond your limits.

If you win the auction remember you will have to sign the Contract of Sale and pay your deposit there and then.

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