Even now, when the real estate market is slowing down, at least 50% of the houses are sold at auctions. This means that any home buyer should know exactly what to do at auction, learn the rules, understand and speak the language of auctions.
Before I knew all the things you are about to learn, auctions scared the daylight out of me. Especially because of the huge amounts of money involved – every silly mistake can cost you a lot.
Let’s begin. All the things you need to do when buying at auction can be split into 3 groups: before, during and after the auction.
Before the auction
Task #1 – Go to other auctions
If you have never bought at an auction, you have to see at least 5 other auctions before you are ready to participate in one. You have to learn the process and understand what’s going on to feel confident when you are bidding on a house. If you feel like doing a little homework before you go – watch this short video of a real auction here.
Task #2 – Inspect
Any house being sold at an auction is advertised as such at least 2 weeks before the auction date (normally 4 -6 weeks prior to the date). In that time all the prospective buyers should inspect the house personally and arrange for building/pest inspections, because once a house is sold at the auction – it’s final and never subject to conditions.
Task #3 – Read contract of sale, ask questions
Another very important thing is to pay a visit to the selling estate agent and get the contract of sale for the house. This contract defines exactly what you are buying and how you are required to pay for it – so read it carefully, ask all the questions and find out everything you need to know before the auction starts. I have an article dedicated to the questions you need to ask when buying a house, read part 1 here and part 2 here.
Not many people know that contract of sale can be changed before the auction, so if you’d like to change the settlement date or the deposit amount – all you need to do is ask (well, it helps if it’s your solicitor or conveyancer asking on your behalf).
Task #4 – Get the money
You should also go to a bank, apply for a loan (if you are borrowing money to pay for the house) and get it approved. Another important matter is that you have the deposit money ready, because if your bid wins at the auction, you will be required to pay deposit right after the auction closes, so you need to money to be available. A deposit can be paid by a bank or a personal cheque (you can read about various kinds of cheques in this article) .
More is coming, stay tuned.