How to prepare for attending an auction
Judging by how much coverage it seems to get in the press, it would be reasonable to assume that the vast majority of houses for sale in New Zealand and Australia are sold at auction. According to CoreLogic RP Data however, most homes are still selling by private treaty, with the only really significant auction clearances happening in the larger cities of Sydney, Melbourne and Auckland.
Those numbers also appear to be falling, at least in the latter half of 2015. CoreLogic notes that the broad trend in auction sales, even in these larger markets, is downwards. In its November 16 auction results report, Sydney’s clearance rate was found to be at its lowest point since March 2013, while the New Zealand Herald reported on October 14, 2015, that clearance rates in Auckland were as low as 39 per cent in some areas.
For buyers, these signs point to one thing – lower house prices. It looks like a great time to get amongst the auction market, but before you do, make sure you’re well prepared for what’s ahead.
Buying at auction can be one of the most exciting property experiences you will have.
Do your research
So, you’ve found a house (or even multiple houses) that you’re interested in. There’s space for all of your various knick-knacks, it’s close to the local shops and transport routes and there are plenty of sun-soaked window sills for your cat to snooze on. Now what?
First, you’ll want to get an idea of how much the house is expected to sell for. The unique thing about auctions is that you don’t have access to the final price at the outset, and it’s not the seller’s obligation to inform you of the reserve. Your best option is to study recent auction results in the area, and see what comparable homes for sale are (or aren’t) selling for. If you’re struggling, speak to your real estate agent – they’ll be able to give you an informed opinion.
Get an inspection
The last thing you want is to settle in to your idyllic dream home, only to have your fridge fall through a kitchen floor that has been eviscerated by termites. A thorough inspection can identify any current or potential issues with the property, and help you decide whether or not it’s the right purchase for you.
Knowing precisely how much you have or can borrow is a great way to put a definitive cap on your budget.
Know your limit
Okay, everything has been checked out, and all advice is pointing towards the house being within your budget; now it’s just a case of waiting for the big day. In the meantime, the best thing you can do is assess your finances and make sure you know how much you can spend.
Remember, even the most informed real estate experts can only estimate how much a house will sell for at auction. It’s all too easy to get wrapped up in the flurry of activity and continue bidding beyond your agreed limit, which is why having your finance pre-approved is advisable. Knowing precisely how much you have or can borrow is a great way to put a definitive cap on your budget, so set your figure and stick to it!
Ask for advice
Buying at auction can be one of the most exciting property experiences you will have, however it’s also easy to get overwhelmed and make strategic financial errors. Be sure to reach out to your trusted real estate agent if you find yourself having difficulty or simply have questions regarding any stage of the process.