Buying at Auction in Australia
Find out about the process of buying property at auction in Australia...
Buying property at auction is popular in Australia, where between 30 and 50 percent of properties (usually in cities) are purchased under the auctioneer's hammer. Auctions have become increasingly popular in the last few years (they're most common in Melbourne and Sydney), as sellers can sell quickly and buyers can usually save money. If you have an eye for a bargain or enjoy the excitement of bidding, you may wish to consider buying a property at auction.
However, it's absolutely vital to do your homework before buying at auction. In particular, you should ascertain the true market value of the property, arrange your finance, inspect the property thoroughly, check the conditions of purchase and carry out (or instruct your lawyer to do so on your behalf) checks on the property such as the title, registration, debts and planning developments for the area around the property.
Tips when buying at auction:
- Research thoroughly - learn the area
- Be selective - have a number of targets and move on if the price gets too high
- Find the TRUE market value
- Attend open homes to assess the level of interest - consider making a pre-auction offer
- Talk to the bank early if a mortgage is needed
- Attend auctions as an observer before bidding
- Stick to a limit - but don't lose a property for the sake of a few thousand
- Be prepared - arrive early - stay calm property is "on the market" (when the reserve has been met)
- Don't worry about dummies, (that is, dummy bidding to drive the price up)
- Go slow - ignore the recommended bid increase and go up slowly
You also need to steel your nerves so that you don't get carried away and bid over your budget! If you're interested in an auction property, you could consider making a pre-auction bid of around 20 to 30 percent less than its market value. Prices fetched at auction are notoriously unreliable, and sellers who are "jittery'" may (legally) agree to a deal before the auction, in which case you could have yourself a bargain.
You can engage a buyer's representative to find a house, bid for it at auction and negotiate the sale. Agents may charge as little as a few hundred dollars to bid at an auction or up to three percent of the price if they also conduct searches (regarding title, etc.). However, this can save you a lot of money, time and trouble. Auction contracts rarely include conditional clauses such as the purchase being subject to a favourable building inspection, which means buying at auction is riskier than a conventional purchase. In addition, cooling-off rights don't apply when buying at auction.
- Auction results in Australia are available online from the real estate website Domain