Arrange a pre-approval
A formal home loan pre-approval is vital to have before bidding at auction. Some buyers make the mistake of not going to their lender until after they have won the property, only to find out they cannot be approved for that amount. A pre-approval will give you peace of mind on auction day as you already know that you are conditionally approved.
Also, by organising your finances beforehand, you will have a maximum limit that you can bid to. This will also stop you from overspending on a property.
Understand the auction process
The best way to be prepared for an auction is to attend as many as you can as a spectator. This way you can see how an auction runs from start to finish and you can also get some strategy tips from watching other bidders. It is also important to have an understanding of auction terminology. For example, do you know what a reserve bid is? The more you understand about property auctions, the more comfortable you will feel on the day.
Speak to a legal professional
Before bidding at an auction, you should speak with your solicitor. They can go through the contract of sale with you and advise you of your legal obligations. They can also organise contact with the vendor if you want to make any amendments to the contract.
Building and Pest Inspections
It is important to have building and pest inspections completed before you bid on a property so that if you uncover any issues, you can either move onto a different property or use any issues as conditions in the contract of sale.
Stick to your limit
Overspending at an auction is a problem for many home buyers. Bidders often let their emotions affect their decision making process, which can often result in them exceeding their spending limit. This is a major problem if you cannot afford to go over your limit.
However, there are certain strategies you can use to stop you from going over the limit.
1. Organise a pre-approval: A formal pre-approval will give you the exact amount your lender is willing to give you.
2. Have a family member/friend attend: By either having them bid for you or just be there with you, they can help you keep your emotions out of your decisions.
3. Be patient: If you bid too soon, you may get too emotionally involved. Use the beginning of the auction to strategize and see who the serious bidders are.