5 Things to Know About Buying at Auction as Spring Approaches
Auctions become a far more common part of the property landscape in spring. As listings increase and competition picks up, vendors and agents tend to use the auction method to generate urgency and maximise the number of competing buyers.
For buyers who have not purchased at auction before, or who have had limited experience with the process, spring is a good time to understand how it works.
Here are five things worth knowing before you bid.
A successful bid is unconditional
When the hammer falls and you are the highest bidder above the reserve, you are legally bound to complete the purchase. There is no cooling-off period, no subject to finance clause and no ability to walk away without forfeiting your deposit, which is typically 10 per cent of the purchase price and payable on the day. This means your finance should be fully sorted before auction day, not after. A pre-approval that has not been formally assessed against the specific property is not sufficient protection if something goes wrong.
Do your due diligence before auction day, not after
Because there is no cooling-off period after a successful auction bid, all your research needs to be completed beforehand. That means arranging a building and pest inspection, reviewing the contract of sale with a conveyancer, checking the strata report if applicable, and understanding any issues with the title or the property itself. Buyers who skip these steps hoping to sort them out after the auction can find themselves committed to a purchase they would not have made with the full information.
Know your limit and decide it before you arrive
The auction environment is deliberately designed to create competition and momentum. Bidding can move quickly, and it is easy to get caught up in the heat of the moment and exceed what you intended to spend. Setting a firm maximum before you arrive, and committing to it, is one of the most important things a buyer can do. That number should reflect not just what you can borrow but what you are genuinely comfortable committing to given the property, the location and your financial position.
Understand what happens if the property passes in
If bidding does not reach the vendor’s reserve price, the property passes in. In most cases, the highest bidder at that point is given the first right to negotiate with the vendor after the auction concludes. This can actually work in a buyer’s favour, as the negotiation typically happens quickly and without the pressure of competing bids. Being prepared to negotiate immediately after a passed-in result can be just as important as being ready to bid on the day.
Attend a few auctions before you bid at one
If you have not bid at auction before, attending a few as an observer before spring gets underway is useful. Watching how auctioneers run the process, how bidding momentum builds, and how other buyers behave takes some of the unfamiliarity out of the experience. Spring brings plenty of auctions to observe across most capital cities and many regional markets, and the time spent watching is rarely wasted.
Having your finance application assessed and pre-approved before the auction season starts is an important step you can take. As your mortgage broker, we can help you compare your options.
*This information is general in nature and does not take into consideration your individual circumstances. Please contact us for further information.
