Buying a property in NSW at auction can be an exciting and nerve-wracking experience. The auction process is a popular property sales technique in the NSW area, and allows the current market to determine the value of a property.
Property auctions have become very popular and many people attend to daydream about their fantasy home or simply to see what happens at this type of auction and of course, many people come to bid and hopefully win the auction.
If you are thinking about buying a property in NSW at auction, read these tips to help make sure you are prepared for the auction experience.
Determine the Property Value and How Much You Are Prepared to Pay
One of your first steps should be to work out roughly what the property is worth and how much you are prepared to pay for it. Spend a little time researching recent sales in the area and speak to neighbours and sales agents. Once you have an idea of how much the house may be worth, set yourself a maximum price and stick to it.
Now is the time to begin the conveyancing process by finding a licensed conveyancer that offers the range of legal services you will require prior to, during and after the auction.
Get to Know the Auction Process
If you are new to property auctions, it is a good idea to attend a few auctions to get an idea of what happens. Watch how buyers, sellers, and auctioneers interact with each other during the auction. If you know who the auctioneer is going to be on the property you are interested in, try to attend some of their auctions so that you know how they perform. Your conveyancer will also be able to advise you on how to prepare for auction day, and what to expect.
Things you Need Before the Auction
There are many things you and your conveyancer will need to do before auction day. Before you will be able to do any bidding your conveyancer will have to arrange for a building and pest inspection to ensure that the structure is in good condition and there are no property damaging pests present such as termites.
It is also important that both you and your conveyancer have had time to read over the documentation and contract, and your conveyancer has negotiated any special terms or conditions prior to auction. If you are the winning bidder, you will be expected to sign the contract as soon as the auction ends, so it is imperative that any necessary changes have been made prior to auction day. However, before signing the contract, have your conveyancer look it over to ensure no changes have been made.
Before you are able to make a bid, you will need to have a loan approval in writing to prove that you can follow through on the purchases if you win the auction. In most cases, you will also be expected to pay a deposit when the contract is exchanged. The deposit is typically 10% of the sale price but that can vary.
If you do not have the funds to cover the deposit, the seller may agree to accept a deposit bond. If a deposit bond is used, you will be expected to pay the full price on the agreed settlement date. Your conveyancer can give you advice on obtaining financial approval and using a deposit bond if necessary.
Make an Offer Prior to the Auction
When buying a home at auction, you do have the opportunity to make an offer before the auction day. The vendor might accept your offer and you save yourself the trouble of having to go to auction. However, if there have been many offers, the vendor may decline all offers, increase the reserve price and go through with the auction.