Blog: Stand Out in the Crowd – Top Auction Tips for First Home buyers
Fast talking, big numbers, and serious competition. This is what people think of when they talk about auctions. For first home buyers, this dramatic scene can be intimidating but buying your first home at an auction doesn’t have to be a nerve-racking experience. With a cool head and the right advice, buying your first home at an auction can be an experience you’ll never forget for all the right reasons.
There are plenty of benefits to buying at auction. The owner usually has a reserve price that they would like to achieve on the day and this can vary by thousands of dollars. This is often dictated by the number of bidders in attendance. So get your foot in the door and make the most it. Here are the top tips for standing out in the crowd at your first auction.
Get the Word on the Street
Before you take your spot at the auction make sure you take a walk down the street. What properties recently sold in the area and how much did they go for? Getting a better idea of the neighborhood will help you to set a better budget and drive you towards success on the day.
Just because you know what the neighbor’s home sold for it doesn’t mean that you’re locked in to that number. If you overestimate or underestimate you’ll find yourself out of the race before it even begins. Always be flexible but make sure you have a limit so you don’t blow your budget.
Talk to the Agent (and Do Your Homework!)
Trust me, the agent doesn’t always speak that fast, and even though they’re acting on behalf of the seller a quick conversation could give you the inside word on what the seller’s goals are. Bear in mind that prices can vary and that the agent is bound to make it sound attractive. Remember that without finance already in place, the auctioneer may not accept your bid. Before the auction, make sure to thoroughly check the following:
- The contract of sale
- The title documents
- The zoning of the property
- Any mortgages or other arrangements currently affecting the property
- Details of any statutory proposals that might affect the property
- Council permits for any past changes to the property
- The sewerage diagram
- Annual costs like water and council rates etc.
If you need help finding out any of this information, or to secure your pre-approved loan, talk to your broker today.
Practice Makes Perfect
You wouldn’t run a marathon without training first and the same thing applies at an auction. Attend a few “warm up” auctions and take in the atmosphere. You can even make a few dummy bids to get used to it. Just don’t end up buying a house by mistake!
Keep Your Cool
One of the biggest mistakes that first home buyers make is panicking on auction day. If you’ve done the research and have set your bidding limit, you’re on the road to success. If it works for you, try bringing family and friends along on auction day to keep you focused.
Quick Tip: Don’t let bad weather bring you down. Rain on auction day can drive away bidders, drive down prices, and increase your chances of success. So get your umbrella and get out there!
Don’t Despair if you Don’t Succeed
Buying your first home is a bit like fishing. Sometimes you snag the perfect catch on your first cast and sometimes you don’t. Trust me, there are plenty of fish in the sea, or homes on the market, and an even better one will come up soon – and next time you’ll have the experience. If you make the highest bid, but the property is passed in, it means it hasn’t reached its reserved price. If this is the case, don’t give up! You may still be able to negotiate a deal with the agent.
Of course the other side of this situation is first home buying success. Once your bid is successful you’re committed to buy and will sign a contract and pay a deposit of about 10% of the sale price. This can be negotiated. Bank cheques or cash are usually the way to go, although personal cheques may be acceptable too. If you’ve won on the day and secured the house you might be overwhelmed by what you have just achieved. Take a deep breath, take a step back, and be sure to celebrate your new home.
If you want to stack those odds further in your favor and get the success you deserve, talk to a mortgage broker before you begin. It just makes sense to talk to a professional with extensive knowledge of the home buying market. If you’re on the hunt for a first home in Adelaide contact the brokerage team at AAA Mortgage Solutions. Our mortgage brokers can help first home buyers in Adelaide to secure success and then assist them with any loan and mortgage needs. Call 08 8182 5555 today!