When buying a home, it is best if you avoid bidding at auction wherever possible.
You don’t want to be going toe to toe in a competitive, high pressure environment, with other buyers who have convinced themselves they have fallen in love with the house. However, if the house you want is a nice one, in a sought after location, you may have no choice…especially in a hot market, where sellers know they can get big results by putting their home under the hammer.
So, even though you may be frustrated after a long period of searching; or whether you simply think you have found the place that is perfect for you, you need to try to keep emotion out of the auction process as much as possible. Remember that a home becomes a dream home because of what happens inside its walls over the years.
It is like a blank canvas for an artist. If you miss out on one, two or even 20 houses that you think are ‘the one’, I bet that more will pop up sooner rather than later. Keeping a perspective can ensure you make the right decision and don’t do anything rash.
First, make a realistic budget and stick to it no matter what. This is the most important part of the whole process. Over borrowing can put you under financial stress, which will turn your dream home into a nightmare faster than you could have imagined. Financial stress is one of the key causes of relationship stress and issues within the family, so that’s a path you do not want to risk treading.
One way to get an edge on other buyers is to make your top offer prior to the auction date. The vendors might accept, not wanting to risk a worse result under the hammer. Next thing you know, you have bought the house on a Friday, while all your would-be competitors are laying out their best bidding clothes for an auction the next day that will never eventuate.
Of course, if the vendors happen to turn down your best offer before an auction, there’s not much chance it would have stacked up on the day. If they do turn it down, you can still turn up to the bidding and see what happens. No harm done.
When you go to an auction, it can help to bid high early. A tough, bold bid early on in proceedings can scare away a lot of the competition. The less competition in the mix at the business end of the bidding, the better your chance of a win.
Tim McIntyre is the senior real estate reporter for the Daily Telegraph and News.com.au.
Over the past decade, he has attained widespread knowledge of Australia’s many unique property markets and is an authority on all things buying, selling and investing.
His commentary appears every Saturday in the Daily Telegraph Real Estate lift out, as well as online at news.com.au.