A little preparation can make buying at auction easy
As the property market has fired up over the last 12 months we are seeing more and more properties going to auction and at the same time we're encountering more and more people frustrated by the process of buying at auction... But it shouldn't be frustrating. We show below how to make things as easy as possible for you to buy at auction.
Preparation is key
The hardest thing about an auction is that you have to be prepared to buy the property without any conditions on auction day. However this shouldn't be a problem if you get your ducks in a row beforehand. The key things to do before auction are
- Understand your limit - Know what you're willing to pay for this house
- Get pre approved - Make sure you have approval for the lending required, before you fall in love with a house if possible!
- Get the checks done - Your Real Estate Agent and Lawyer will help with this. Often things like LIM reports and building reports may already be completed on the house. Check these or arrange your own to make sure you know what the property is like
- Get your deposit ready - As you'll have to pay a deposit on auction day it's important to make sure you've considered this. If you don't have the funds available right away we can often arrange a temporary advance for you to pay the deposit on auction day.
What if I have less than 20% deposit?
There are a couple of extra hoops to jump through when buying at auction if you have less than 20% deposit but as mentioned above, preparation will make this a lot easier for you. A little time and planning with us can make sure you're sorted.
- You'll likely need to use your Kiwisaver so you will need pre approval for this. We can help with this.
- You may need a Registered Valuation before the auction to set your maximum bidding amount. We can arrange this on your behalf an ensure you get good advice from the right professionals in this regard so that you can bid with confidence
- There may be more conditions to tick off for your lending - Banks often impose a few more conditions to loan approvals for borrowing over 80% but with some time and us on your side we can take care of these easily for you. Clearing the way to bid.
The benefits of being ready to bid
We've all heard stories of bidding wars where properties have sold for $100K over reserve and crazy things like that but this is very rare. I've sat in a number of auction rooms with clients over the last ten years and often there have been very few if any bids on properties. If this is the case then you may be able to secure the property for less.It's also worth considering all of those people putting the auction in the "too hard basket" so you could well be up against a lot less buyers than if the property was sold in the normal way. This could also help you to secure the property for less.
How can we help?
- Set a budget and maximum purchase amount
- Get you prepared and pre approved
- Tick off your conditions and make funds available to bid on auction day
- Work with other professionals to ensure all other checks made smoothly
- Help with an auction day strategy - It may be your first time but it isn't ours!
So if you're looking to buy a new property and would like to help us make the auction process easy for you then we'd love to hear from you
Adam Thompson, Claire Martin and the My Mortgage Team