Enriched by a vibrant property-loving culture, Melbourne’s real estate market lends itself to auction sales. The concept of bidding against other keen buyers for the property you’ve set your heart upon can feel like a daunting prospect, but it’s one of the most transparent methods of sale a purchaser can engage with. Many of Melbourne’s properties go to auction, so it’s worth becoming familiar with the process. In today’s blog, Hatch Financial Services have prepared an auction day game plan to have you and your negotiation skills revved up for the big event. Going, going, gone!
Buying at auction is a process which involves more than one day of action. Familiarising yourself with the auction process in advance by attending others in the area gives you a sense of your competition – be they investors, families, developers or young couples – and prepares you for what might happen on your own auction day. Auctioneers and agents often speak of the uncertainty that comes with auction day, and they’re not wrong: anything can happen, with outcomes dependent on a number of factors beyond your control.
Gauge the Market, Establish Your Credentials
If you’re struggling to gauge the market, speak to a local expert agent or engage a buyer’s advocate. Their knowledge of your local real estate environment and understanding of recent market trends will give you confidence and enlighten you. Don’t forget to make yourself known to the selling agent, too. Buyers that appear ready to do business stand a better chance of obtaining more favourable conditions on auction day (such as shortened or lengthened settlement periods or an amended acceptable deposit). Keep in contact throughout the campaign to ensure you’re called first should another buyer make an offer prior to auction.
The bottom line is – make yourself known as a serious buyer with the capacity to act.
Decide on a Bidding Strategy
Ying Chan of WBP Property Advisory encourages buyers to be clear on their personal strategy for bidding and pass-in before the actual auction. Confident bidders make their presence felt early, with bold bids designed to intimidate – whilst quieter bidders wait in the wings before joining the fray. There’s no one-size-fits-all strategy for auction day, so try and play to your strengths and offset any perceived weaknesses. If you think your nerves may get the better of you, elect someone else to bid on your behalf. A buyer’s advocate can assist with bidding and negotiation, and they can often be the difference between securing your dream property and losing out to a stronger bidder.
Obtain Finance from Hatch Financial Services
It’s paramount that your finances are in order pre-auction. Unlike private sales, all sales at auction are final, so it’s wise to obtain an unconditional approval from a suitable lender before bidding. You’ll then be able to define your ‘absolute maximum’ budget – that is, the most you’re able to pay, allowing for a little extra stretch should you find yourself caught at the pointy end of a bidding war. Be sure to arrive with a clear decision on your final budget – don’t leave it to a heart-lead bidding impulse on the day.
The morning of an auction day presents a mixed-bag of emotions for buyers: you’ll likely feel both nerves and excitement. Try to keep calm, and don’t expect success with certainty. After all, anything can happen at auction. Go over your final budget again, and be clear on your limit. When you arrive, check in with the selling agent. You’ll likely have built a relationship with them throughout the campaign – use this to your advantage. “Make sure you establish your intention to buy early on,” says WBP’s Ying Chan. “You don’t want the auctioneer to sell without coming back to you for a final bid.” As the auction nears its zenith, don’t get too caught up over the few extra dollars you may need to produce from your emergency budget to secure the sale. Over the twenty to thirty-year life of your loan, a few thousand dollars aren’t significant enough to lose a great property over.
Finally, enjoy your auction day! If you’re the highest bidder – or you manage to successfully negotiate after a property has been passed in – it will be a day to remember for many years to come.
Engaging a broker to help secure finance prior to auction puts you in good stead strategically, as you’ll understand your budget and know where you can afford to stretch (if necessary!) to secure property. Hatch Financial Services have access to over 25 different lenders, ensuring you’ll be able to obtain the best rate and best lender for your lifestyle. Good luck!