Ever since coronavirus fears and restrictions subsided in Sydney in mid to late 2020 and open homes and auctions have been permitted once more, house auctions have been increasing.
We’ll tell you how to prepare to bid at the next auction during this busy time and what you can do to increase your chances of success.
Auctions are both legally binding and unconditional in Australia. So if you win an auction, you are mandated to buy the property and restricted from changing the terms of the contract of sale. There is no cooling-off period of any kind, meaning the highest bidder must put down at least a 10% deposit (usually) after winning the bid.
But while auctions can be a great way to pick up a property at a discounted price, they can also create competition and drive prices up. Many people will try to negotiate a sale price prior to the auction, so that you can have more control over your budget and be less susceptible to unexpected factors, such as other bidders or pressure applied by the auctioneer or real estate agent.
Note that there are no do-overs in auctions, so you need to be as prepared as possible. If something happens, such as your loan falling through or a change of mind, you won’t get your deposit back. This means making sure you have enough to make the required deposit if you do win the auction and understand the ins and outs of your bank’s terms of approval.
Here are a few reminders you’ll need to always keep in mind before buying a property in an auction.
Some solicitors only review contracts and so buyers need to be prepared to dig through the details of a strata report themselves and make themselves comfortable with the history of the building and the management of the owner corporation
Pre-approvals are not a guarantee that you will get your home loan approved. It’s usually dependent on the security being acceptable to the bank and perhaps final verification of details within your application. You should always consult with your acting solicitor to get proper guidance. Typically, pre-approvals are only valid for a certain period, usually from 90 days of your application, but this can change according to your lender’s terms and conditions.
Don’t hesitate to speak with Shore Financial if you need help in this area.
And if you can’t present any of the above, you’ll need to present two proofs of identification — one government-issued ID and another valid document that shows your address.
Should you have any questions, the real estate agent should be prepared with all requirements for the auction. All sale conditions will be displayed at the auction as well as on the NSW Fair Trading Website.
Other than making sure you stick to your budget, it’s also important to keep your emotions in check and not get too attached to a property. You may have your eye on that one property that seems perfect but ends up selling for much higher than expected, so remember that there will always be something else around the corner!
There will often be last-minute bids in certain cases and it’s best to avoid getting dragged into an emotionally charged bidding war, where you’ll most likely only end up regretting exceeding your spending limit.
Sydney house auctions can be tricky and the variance from one property to the next can be enormous, making it critical to be as prepared as possible. If you’re trying to get your finances in order before you start bidding in auctions, Shore Financial has the expertise you need to make the right choices.
The right mortgage broker can tell you more about which home loan will fit best with your repayment goals and help you source your mortgage from a reputable lender, so you’ll always have all the information you need with the least amount of hassle.
For instance, our team can help you avoid investing in properties with blacklisted postcodes or certain features and titles that banks may not approve. From the application process to the final paperwork, you can count on us throughout every step.
If you’re ready to make a move on a property, give Shore Financial a call today. Whether you’re just starting to get your feet wet at auctions or you’re buying your tenth property, we personalise our advice to match your portfolio goals.