By Hannah Nicholas,
MSN NZ Money writer
Auctions are as popular as ever and to be successful at one and win your dream property, you have to know what's involved and importantly, how to play the game. We'll get you started.
Get to know the process
Before you bid at auction you really need to know what happens during one. The best way to get to know how auctions work is to gain experience.
Attend as many auctions as you can to get a feel for how they run and how the agents and bidders play the game. This will help to build up your confidence before it's your turn to become part of the action.
Tip: If you know who the auctioneers are going to be for a particular property you'll be bidding on, attend other auctions they are conducting to gain a feel for their style.
Sort out your finances and other matters
Speak to your lender before the auction day to organise your finances. You must able to proceed with the sale if you're the winning bidder.
Have your solicitor go over the sales contract and any other legal documents. If you want to change any of the conditions in the contract of sale, such as the settlement time, you must request this before the auction.
Tip: Be sure do all your pre-purchase research such as building, pest and LIM reports before the auction. You need to be satisfied with all aspects of the property before you bid.
Set your limit
You should always come to an auction with a set budget in mind and be sure to stick to it. Never give your limit away to an agent or give any indication of what you think the property is worth. Do your research and figure out what you believe you should pay for the property.
Tip: Set your limit just above a rounded number say $653,000 instead of $650,000 as most bidders will round a figure off.
How you plan on bidding is up to you and something you need to give thought to. Do you want to come in strong on the day and show others its game on? Or do you intend to sit back and play the waiting game? Everyone will have different opinions and strategies on the best way to tackle auctions but whatever you decide make sure it's something you're comfortable with.
Tip: You will face pressure on the day from the selling agent so have tactics in place to overcome this.
When a property doesn't sell
If you're the highest bidder and the property's passed in, do you know where to go from here? You'll have to be prepared to negotiate and stick to your budget. If you're not the highest bidder, let the agent know you're interested too as you may still be in with a chance.
Other top tips
- Always let the real estate agent know you're interested in a property (without given away a figure). This is called "registering your interest" and means the agent must let you know if any pre-auction offers are made.
- Consider a pre-auction offer if you think you are in with a chance.
- Ask the agent how many building reports etc have been conducted so you can gain an idea of how many parties may be bidding on the day.
- Remember there's no cooling off period. You must do all your pre-auction checks beforehand and have your deposit ready on the day (usually 10 percent of the purchase price).
- Arrive at the auction will plenty of time to spare and take someone along with you for support.
- Lastly, remember to always stick to your limit. Don't get carried away by the pressure and your emotions on the day. There are other houses out there.