Paying more than a home is worth is a buyer’s worst nightmare come auction day.
Time and again, people spend more than they’d expected or budgeted in the heat of a competitive auction environment. But there are strategies to consider that will ensure you don’t pay too much.
The most important and fundamental tip to know when buying at auction is to identify prior to the day how much the home is worth and what you’re prepared to pay, Good Deeds buyer’s agent and Location, Location, Location host Veronica Morgan said.
If you don’t know how much is too much, you’re quickly in a situation where you’ll pay above and beyond what you should.
Buyers must ask themselves: ‘At what price will I kick myself if someone else buys it? Really know what your limit is and then you need to stick to [it],’ she said. Knowing your limit
Researching comparable properties in the area is crucial. But while buyers can prepare themselves for auction weeks in advance, real estate agents are ‘very skilled at getting people bidding’ as it’s what they do ‘day in day out,’ she said.
Knowing your limit will help you when savvy auctioneers attempt to squeeze out an extra few thousand from your wallet.
There are two situations when buyers are most vulnerable to overpaying or buying an unsuitable property – up to a month after missing out on the home they really wanted at auction, and right after you’ve sold and you start to panic about moving twice.
In these situations, buyers need to make sure their head rules their heart, Wakelin Property Advisory associate director Jarrod McCabe said.
‘If in the weeks leading up to the auction you have done your homework about prevailing values for the property type in question in that location, you will be able to set a bidding limit before the auction that is realistic and fair,’ Mr McCabe said.
Watching how much you’re increasing your bids by when at the auction can also make a difference.
‘Just because you have the budget to increase the bid by $30,000 doesn’t mean you should; doing this can see you pay well over other bidders’ limit in the one go and can cost you tens of thousands,’ he said. Researching before auction
Having a strategy for your bidding and considering your actions on the day will ensure you’re mentally prepared but doing your homework and due diligence is just as important, Propertyology’s Simon Pressley said.
‘Persist with getting the vendor to accept a pre-auction offer by getting your own terms as close to auction condition terms as you can,’ he said.
Carrying out searches on the property ahead of time is critical, including finding out about easements and council approvals of any extensions and renovations, as well as getting professional building and pest inspections.
EPS Property Search’s Patrick Bright said auctions are ‘very much about competition … You want to be a winner while trying to spend as little as possible – two things that are in conflict with each other’.
‘All you need for a property to sell for a silly price at auction is to have two poorly researched, emotional buyers who get carried away with their bidding and I suggest that you are not one of them,’ he said.