Preparing to buy at auction

Buying at auction can be a very exciting and rewarding experience; however, it is important to familiarise yourself with the process first so you can be 100% prepared for what to expect. Speak with the real estate agent about the auction process in your area (including the relevant legislative and financial requirements). They will be able to walk you through what you need to prepare and what you will need on the day. Following are some helpful tips.

Prior to auction day:

1. Obtain a copy of the contract, provide it to your solicitor for review and advise them of your intention to purchase.
2. Get in touch with an LJ Hooker property finance consultant to discuss your indicative borrowing capacity - this will help you know how high you can bid.
3. Attend some other local auctions to familiarise yourself with the process prior as it can be a daunting process for first time buyers or first time auction bidders.
4. Under auction conditions there is no "cooling off period" and you are making an unconditional purchase so all questions and inspections will need to be made prior to the auction day.
5. Conduct all inspections (such as pest and building and council zoning) and seek legal advice prior to the auction day - this way you can bid with confidence.
6. If you are the successful bidder you will be required to pay a deposit of (typically) 10% at the fall of the hammer, so this will need to be arranged prior to the auction day.

On auction day:

1. If the auction is on site, arrive early for one last look at the property and to have any of your questions answered by the agent.
2. You need to register to bid on the day and you will need to show your driver's licence (or similar identification) to register. You will be provided with a registration number that you will be required to show each time you make a bid.
3. If you are not a confident bidder, you are able to appoint someone to bid on your behalf instead - you will need a letter of authority to do this, which must be provided to the auctioneer prior to the commencement of the auction. It would be wise to discuss this with the agent a few days prior to the auction so that they may assist you to ensure you can participate legally in the bidding process.
4. When bidding commences it is important to know that people bid in different ways - some will quietly assess the crowd and only join the bidding later on, while others will happily lead the bidding. You should bid in whichever manner is comfortable for you - there is no right or wrong way to bid.
5. If bidding reaches the reserve price, the property will be sold. However, if it does not, and the vendor does not accept the highest bid, the property may be passed in and negotiations may begin again immediately with unconditional and conditional prospective purchasers. It is often beneficial to be the highest bidder in this case as vendors will often extend the first right to negotiate to the highest bidder.

There is no way of determining exactly what the property will sell for at auction; however, the agent should be able to give you an indication of the price range based on comparable recent sales. It is also beneficial to research the market yourself by visiting open homes in the area surrounding the property and browse similar properties on line. It is important to set yourself a limit - remember the property is only worth what someone is willing to pay to secure it so there is no telling what the sale price will be.