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Preparing Yourself for Auction

Auctions are a stressful situation for both sellers and buyers. At any moment either could be forced into making a snap decision which they could end up regretting. Therefore, it is vital to be prepared for auction as either a buyer or a seller.

Buyers, in particular, have little margin for error. If you make the winning bid you are legally obliged to sign contracts and pay the deposit that very day. Also, there is no cooling off period, thus ramping up the pressure on the buyer.

But this, of course, isn’t something that should put a potential buyer off auction. Instead, it is best to prepared in order to win your dream home at a price you can afford. You want to be prepared before and after auction.

Before Auction

Set yourself up for auction day success by preparing before the day:

  • Understand the process by heading down to auctions you have no intention in partaking.
  • Check out some open houses of the trial auctions you plan to attend. This way you will get a feel for the difference.
  • Once you have found a place you like, secure a contract from the agent. Have your legal rep check the contract and read through it yourself.
  • Pre-purchase building and pest inspections are actually vital to ensuring you know what to pay at auction.
  • Secure finance – secure a pre-approval on your loan (SDK Finance will help you with that).
  • Determine the maximum, final sum you are willing to pay for the property.

Come Auction Day

You don’t have to pre-register to bid in Victoria, just ensure you are on time and ready to navigate the day’s situation.

Throughout the Auction

Sit back a bit. Watch the other bidders and hold out until the property is “on the market” before making your bid. When a property is “on the market”  it means the seller is happy to sell at the current bid and the property is sure to be sold OR that bids have reached the reserve price.

Bid strongly. You’ve decided on your budget, so you have to confident about each you make that it is within your budget. You also don’t have to agree to the auctioneer’s suggested bid. If the auctioneer want $5000, you can offer $1500 if that works better for you.

Don’t surpass your budget. If you are unsure about whether you can stick to your budget, take your strong-willed, stubborn mate for backup.

Post-Auction

If you have put forward the highest bid after the property was declared “on the market” well congratulations, you have just bought yourself a property. The agent will take you to a quiet corner to finalise the paperwork. You’ll have to pay your deposit here.

If the property didn’t reach the reserve price and “passed on” you will have the ability to negotiate. If you were the highest bidder, you have the first right of refusal of the seller’s chosen reserve price. If you’re not the highest bidder, contact the agent and make your interest in the property known.

If you want to find out more regarding auction rules and regulations, visit Victoria’s fair trading or consumer affairs authority.

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