A Buyer’s Guide To Auctions
For many first home buyers, the thought of going to auction can be seriously intimidating. This can be put down to a number of different reasons, but some of the most common include a lack of familiarity with the process itself, the perception that auctions lead to higher prices and concern at the thought of being in direct spending competition with other buyers sitting next to you.
Auctions don’t have to be scary though, and with a little bit of knowledge, you can make sure that you’re prepared for anything that you might encounter in the search to secure your dream home. Read on for the Laing+Simmons guide to buying a house at auction.
It’s critical to go into any auction with a firm budget in mind.
Be aware of the differences
Auctions operate slightly differently to other property purchases, with the key change being that there is no ‘cooling-off’ period. This is the space of usually 5 days where the contract can be cancelled if you’re not happy. Many buyers aren’t aware that this doesn’t apply to auctions, so make sure you’re not one of them, and have done all due diligence to ensure you’ll be satisfied if you win.
It’s also critical to go into any auction with a firm budget in mind. If you don’t have this and bid too much, you’ll be obliged to follow through with the purchase.
Become familiar with the process
Despite all the theatrics, property auctions are very similar to any that you might have encountered when buying clothes online or bargaining with a vendor. Essentially, there will be a series of escalating bids (in increments determined by the auctioneer), and when nobody is willing to go any higher, the leading bid wins. This is assuming that the pre-set ‘reserve’ price has been reached before the hammer falls.
If the reserve isn’t met, the highest bidder generally gets the first right to negotiate with the seller, so it’s still worth leading an auction even if the reserve seems too high.
Play your cards close
A common fallacy is that auctions favour the seller but that simply isn’t true; it’s actually one of the fairest methods of sale because you know exactly who and what you’re up against. Even so, there are ways that smart buyers can gain an edge. The best way to do this is by exploiting the fact that nobody knows your budget, so don’t get loose lipped and give away your edge. You may even be able to snag a deal that’s slightly below your top offer.
Of course, like all things property, auctions can still be a bit confusing even for seasoned buyers and sellers. The best way to become familiar is to head along to a few and scope things out, and if you have any questions at all, get in touch with the team at Laing+Simmons today.