Auctions are more popular than ever, but buyers need to understand some important dos and don'ts to make sure they get the best results.
Due diligence upfront: Unlike sales by private treaty, auctions are unconditional. If the hammer falls and you have the highest bid, then congratulations, the house is
yours - no ifs and buts. It's critical that you have checked out anything that might influence your decision to buy the house before you attend the auction. The two biggies are making sure the house is sound and that it is worth the amount of money you are considering spending, so ensure
that you have had a building inspection ($300-plus) and some sort of valuation; whether it's a full inspection by a registered valuer ($500-plus) or an automated estimate of value (an E-Valuer report from QV.co.nz will cost $30).
Do know what to expect: Make sure you have attended a number of dry-run auctions where other people are bidding for homes before doing it yourself for real. Experience is critical. Familiarise yourself with the protocols; how does the auctioneer open the bidding? What bid ranges are typical - $5k, $10k? How does the auctioneer indicate that the reserve has been reached and the home is now selling? Are vendor bids permitted?
Do expect pressure: Auctions are stressful affairs for most people (including the seller). Auctions are public sales arenas and participants understandably feel self-conscious and uncomfortable. Take some deep breaths and try to enjoy the proceedings. Remember everyone is in the same boat and going through the same emotions. Be prepared for the auctioneer's banter and for the agents to gently try and cajole you into increasing your bid should the bidding
stall below the reserve price. Knowledge and experience of the auction process will remove much of the pressure.
Do be philosophical: If another bidder has deeper pockets and wants the home more than you then they will walk away with the keys. Don't add more pressure to yourself by thinking you must win the auction.
Stick to your limit: Keep in mind the most you want to spend - and stick to it.
Don't bid against yourself: If you are the highest bidder and the house hasn't reached its reserve price, try to avoid increasing your bid when it is clear that you have no competition.
It is better for the buyer for the home to be "passed in" and for you to negotiate in private rather than under the gaze of everyone in the auction room.
Don't get careless with your pre-auction checks: If you have been outbid at three or four previous auctions - all of which have involved you shelling out many hundreds of dollars for now redundant builders' reports - it can be very tempting to take a chance and bid without paying for yet more due diligence. However, this can be a recipe for disaster, especially in these days of leaky building syndrome.
Weigh up the potential downside of neglecting to do thorough pre-purchase checks before making what might be a false economy.
Don't rule out a pre-auction offer: Auctions are full of uncertainty for the buyer and the seller. Will it be a frenzied affair with five competing buyers sending the price sky high? Or will no interested buyers turn up, despite the seller having funded a four-week advertising campaign? If the latter is the case it will mean yet more weeks of inconvenient open homes and unbudgeted advertising expense. The old adage involving a bird in the hand is often a
very wise one for sellers to bear in mind. A pre-auction offer, especially at the beginning of the auction campaign before most of the adverting costs have been incurred, can be a very astute move by a buyer.
The offer will need to be unconditional and at such a level that it will tempt the seller to accept it, but it does remove that nagging uncertainty that has been keeping the seller awake at night. An agreed offer will short-circuit the four-week campaign and bring forward the auction to two working days from acceptance; that doesn't give the other buyers much time to do their pre-purchase checks or secure finance. The opening bid will be the accepted offer price
and in many instances it will secure the home without any competition.
www.aucklandhomefinders.co.nz
Auctions are more popular than ever, but buyers need to understand some important dos and don'ts to make sure they get the best results.
Due diligence upfront: Unlike sales by private treaty, auctions are unconditional. If the hammer falls and you have the highest bid, then congratulations, the house is
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