What do I need to know / do pre auction (buying not selling)?

Hi, I am attending an auction soon with the intention to bid if it is priced at a level I am comfortable with.

I have no idea what I am doing to be honest (never even been to an auction let alone bid at one). Is there some sort of checklist of things to do? Finance is already being organised, do I need to do building / pest inspections pre auction or is the sale subject to those things post auction?

I assume I will need a conveyancer or something similar if my bid is the winning one?

I did read somewhere (I can't remember where) that I need to get a copy of the contract BEFORE the auction and have someone with legal backgrounds read through it? I thought the contract was done after the auction (this is how inexperienced I am lol).

 

Get a P&B beforehand - there are no "subject to" clauses in an auction contract.
Get a contract review done by your solicitor and get agreed changes in writing from the vendor's solicitor before auction day. In the absence of this, you are accepting the contact "as is".

 

Thankyou mate, much appreciated

 

Every weekend before your auction attend as many auctions as you can to get a feel for the process. That way you will find that the auction you are actually interested in will be less intimidating.
Marg

 

That's a really good idea. Thanks

 

Awesome suggestion.

Try to head to some being sold by the same auctioneer as the property you're keen on too - that way you get to see how they operate.

Stick to your budget too! Don't get carried away by the hype. Some borrowers are way too emotionally invested which can cause the price to blow out.

Cheers

Jamie

 

I posted this awhile back, its what I do. It may or may not help:

AUCTION STRATEGY
1. Know the value of the property you are bidding for and do not bid over it no matter what.

2. DO NOT let the agent know how interested you are in the property when you view it ect prior to auction. I let them know I am interested but never desperate.

3. Dress decently on the day. I sit somewhere on the side so I can stare down other bidders if I choose. I often do.

4. I never, ever start the bidding. I wait until the property is actually on the market. This can be tricky sometimes but you can notice a subtle change in the auctioneer’s language, indicating it is really on the table now.

5. I bid quick, hard, and relentlessly. If the other person says 800, before he can even finish his words, I shout out 810!. When someone counters, I always beat their bid before or just after they finish saying it , always stealing the first place.

6. I tend to use knockout bids, eg someone says 820 and it’s jumping in 10k increments but quite slowly, I might say 850, loudly and confidently while I have a fixed stare on them. My aim is to slightly intimidate and give the impression to other bidders that I have an endless supply of cash and that I am an emotional and unreasonable buyer who will buy at any price.

7. Once it goes above my predetermined limit, I stop bidding and am out. No ifs or buts.

8. If I am the last, highest offer and no others are making higher offers and the agent comes to talk to me saying something like " we are almost there and if can increase by X amount you will have a great chance. I just ignore their BS and say I have ALREADY passed my budget and that’s it for me thank you.

9. Having the property passed in, and you being the top offer puts you in a very strong position to negotiate after the auction, and the vendor usually in a weaker position with more pressure. There is no need to increase your offer when you are already the highest offer with no other interest. It’s just bidding against yourself.


I know everyone has a different style and this is what works for me personally. If 1 or 2 points resonate with you and is a little useful then great.

 

Dan the auction game can be dangerous,sometimes as someone has already said just go along stand down the back r/h of everyone so you can watch everything from that angle..
I seen in inner brisbane once 3-5 people start playing the hand in the air game some pay way over the value range just to say they outbid everyone even though they just bid 800k above what the first person bid on what they thought was value..good luck..

 

Take someone with you, tell him/her your maximum willingness to pay (WTP) and ask them to stop you at your WTP no matter what. People tend to do irrational things (pay over what they can afford) under pressure.
Oh and I know someone who took his Chinese friend to auctions, he used this to intimidate other bidders, not sure if it flies. ;P

 

This might vary a bit in your state, but here you need to put 10% down after the auction (which is tough if you don't know what it'll go for) and also agree to their unconditional contract and its settlement duration.

If that's the case there, then you can email beforehand to get approval on amount of deposit and duration of settlement which will be honored if you're the winning bidder.

 

Thanks guys, excellent advice.

to address a few comments:

I can't go to one by the same auctioneer beforehand as it's in a different state but I do see the benefit of being able to do this.

I have set a limit that both the missus and I are comfortable with (my limit for this property is $50K higher than the missus one as I have been monitoring the market and I believe it is worth the value I have chosen) so I have put in for pre approval of the amount to satisfy my amount. If we turn up and the missus falls in love with it and wants to use my limit instead then all good. If not then we stick with out original agreed limit. We do not bid 1 cent above our planned limit on the day.

I chose a number for my limit and added $7K to it to make it quite obscure, this way I could price everyone with that same flat number out of the bidding.

I'm not going to lie about it, I love this house and it ticks all the boxes for us BUT, there was one 2 months ago that did also and there will be another one in a couple more months so if it goes above my limit, it's not meant to be mine .

We are a little emotionally into this one as it's the one we will move in to anytime between 2 and 10 year time. I don't believe we will let this make us go beyond our limit.

I will dress as well as I can on the day but we are up there for a weekend away and the auction for this place came up on the day we leave to come home .

 

Definitely get some practice in at some other auctions first. Register, but don't bid.

Probably be best advice I can give.

 

Excuse my ignorance mate but what does "Register but don't bid" do for me? I assume get me used to being a part of it?

 

Your heart will pound harder if you are holding a bidding number.

Trust me

 

These 3 points in particular (not ignoring the other points esp #1) make bidding a very structured and non-emotional process. Focus on following these and you won't get drawn into someone else's rhythm.

I relied on #5 heavily when I bid for our current PPOR, and also helped by the fact that I'm Asian and wanted to give an impression that I had an endless supply of money.

If you already know this then I'd say you're more head-wise than the majority of bidders out there If this one is meant to be yours then it will be, otherwise you just haven't found it yet.

 

My bidding card would have been illegible if it weren't for the bright sun and 1/4000s shutter speed. I swear the card had a vibrating motor in it somewhere.

 

Hehehe my heart is pounding just bloody talking to all of you about it lol

 

[QUOTE="
Oh and I know someone who took his Chinese friend to auctions, he used this to intimidate other bidders, not sure if it flies. ;P[/QUOTE]

LOL. I doubt the Chinese Friend strategic will work, but you never know...

 

On these points, there is a lot of pressure if the highest bidder is close to the reserve - "just up the bid to X and you can walk away under auction conditions" etc.
I was bidding at one earlier in the year and was coming second having gone to my max. The winning bid was about $10k up on me. I refused to dicker any more having got to my maximum despite the auctioneer and helpers.
They worked hard on the bidder (and probably the owner) and got him to go up by another $20k to get it "on the market". Now, because I was buying with a fair bit of heart (PPOR), I decided to test him one last time, and just before the hammer I called another $5k. He immediately added another $5k and I was definitely out.
Now if the highest bidder had not got to a reserve and stayed strong, then after the auction they would have been negotiating with strength and may not have needed to go up $20k, and then certainly wouldn't have had me there to push another $10k.

As far as I know, the auction conditions continue after the auction - but only for the highest bidder. Does anyone know the actual state rules? For the highest bidder, is it until midnight, or they leave the premises, or some other trigger?

 

What if no one open the bidding? does this ever happen? They listed it back in July at offers over $X then they took it off.

The previous real estate tried to also list it for rent $50 - $100 more than the appraisal the new agent sent me and it didn't get a bite.

I can only assume the last mob over valued it and this mob are closer to market value. being that this has been messed around for 3 months it could work in my favour if the owner is looking to get it over and done with. I also have the bargaining chip of being able to offer whatever settlement period as I am only going to rent it out.

Whilst the auction strategy may work to get more dollars, I know what it "didn't" sell for in July and I also know the rental appraisal of the house and the yield of the area (which makes my price evaluation really really close too )

With any luck I am the only person there and they take less than my limit