Avoid Auction Nightmares
If you've recently scanned through the latest property listings you'll know auctions are hugely popular right now. They're a hit with sellers because they typically attract a wider range of potential buyers, foster more price-driving - competition and create a finite deadline and sense of urgency (which can induce pre-auction offers). But for potential buyers they can be an extremely stressful nightmare.
Given the huge proportion of sellers currently opting for an auction, auctions are virtually unavoidable - and serious buyers can't afford to scan past any auction listings. However buyers can follow a strategic approach to avoiding auction stress. We think the team at Westpac have some great advice, check it out below:
1. Do your homework
Before you even consider bidding on a property, you need to do all your research. It's kind of one of those phrases thrown around as the number one thing to do for home buyers, but for good reason. Especially with auctions, where your final bid is binding, you can't go back or change your mind, so having all the info you need before you raise your hand up to bid is pretty critical.
Get a building report. A builder will be able to tell you if there's anything structurally wrong with the property.
See what the council knows. Homes.co.nz has freed up the council public record for most homes in NZ. Bedrooms, materials, and house size should all match what the seller is saying, or you'll want to dive a little deeper by ordering a council property file.
Get a LIM. See things like if there are any restrictions on the property and what's happening in the area, like if you're going to have a motorway built next door.
Do a drive by. While you don't want to look like the neighbourhood stalker, taking a drive at different times around the area can give you a look at what it's like to live there, including things like noise levels.
Get your lawyer to check everything over. Especially if you are a newbie, getting your lawyer to check over all the important docs and the sale and purchase agreement in advance can give you some peace of mind.
2. Get to know the area
Especially when the market is hot, sale prices can get a little out of control, and values can skyrocket. But that doesn't mean you have to go in blind as to what the property will go for, or what you should realistically pay. Check out:
Comparable sales. What other similar properties have sold for nearby.
What else is on the market. See if they have a listed price and also get a feel for whether interested buyers have a choice in the area or whether they'll all be preying on the same property as you.
Estimated values. While you used to have to pay for these, EHomes.co.nz has a free computer-generated estimate on most homes to give you a rough idea of value, both of the property itself and surrounding, comparable properties. They are more up to date than Rating Valuations, but of course if you want an assured value you can always pay for a Registered Valuation (but that will set you back a fair few hundred dollars).
3. Get your money sorted
Auctions are quick, to the point, and final, so you will need to make sure you can front up with the cash should you win. Talk to Prosper, get your pre-approval in place so you know how much you can borrow, and of course make sure you can access your deposit money.
4. Get some practice in
If auctions fill you with a bit of fear, or you simply have just never been to one, Andrew North, Harcourts Cooper & Co auctioneer and current REINZ Auctioneer of the Year, recommends watching other auctions before yours.
Auctions are not something you do every day. Each one is different, and each one deals with different people, so you need to have the ability to be flexible and fluid, he says.
In saying that, watch other auctions before yours. Watch how they bid and try to guess who the winner is going to be by their body language, then you can try to replicate it.
5. Stick to an auction strategy
Do you hold tight and wait until right at the end to bid? Or do you put in a large bid early to scare everyone off? It's all tactics, and some may work for you. But at the end of the day all that matter is if you're the last one standing.
AUCTION TIPS AND TRICKS
Stick to the plan, and look like you know what you're doing.
Read your opponents (it's not about staring them down, just maybe getting a sense of their body language - do they look like they're nearly done or like they have oodles in the bank?)
Don't overspend - it's easy to get carried away in the moment, but stick to a number you've determined is within budget before the auction starts.
According to Andrew another way some buyers come undone is from the auctioneers getting them to change their minds, convincing them to make one last bid - it is their job after all.
As an auctioneer my key performance criteria involve how many times I can change the minds of buyers. So be prepared for auctioneers to have those conversations with you, and maybe even have them with yourself first.
Be the last bidder, even if you don't reach reserve, be the last bid. That way you'll have first rights to negotiate with the seller