Finding your dream property should be an exciting journey. It’s about mentally arranging your furniture in the living room and imagining family barbecues in the backyard. But if the home you have fallen head over heels for is scheduled for auction, those happy daydreams can quickly be replaced by a case of nerves.
Auctions are a big part of the Australian real estate landscape. For first-time buyers, they can feel like a high-stakes theatrical performance complete with fast-talking auctioneers and intimidating competitors. However, with the right preparation and mindset, you can approach auction day with absolute confidence. Here is our beginner’s guide to mastering the Australian auction.
1. Preparation is Your Best Weapon
Before you even think about raising a paddle, your groundwork needs to be flawless. Unlike a private treaty sale, there is no cooling-off period at an auction in Australia. When the hammer falls, the home is legally yours.
Ensure your finance is fully unconditionally approved, not just pre-approved. Organise your building and pest inspections beforehand, and have your conveyancer or solicitor review the contract of sale. Knowing the property is structurally sound and the paperwork is airtight gives you the peace of mind needed to bid confidently.
2. Understand the Lingo
Auctioneers move quickly, so knowing the terminology is crucial. The most important phrase to listen for is “on the market.” This simply means the vendor’s reserve price (their minimum acceptable price) has been met. From this point onward, the highest bidder will walk away with the keys. But be mindful that they don’t always say “its on the market” so don’t hold off bidding until you hear this
If the bidding stalls and doesn’t reach the reserve, the property will be “passed in.” Don’t panic if this happens. Usually, the highest bidder is granted the exclusive first right to step inside and negotiate privately with the vendor, so it’s good to be the highest bidder when this happens
3. Stand Tall and Bid Confidently
When the big day arrives, position yourself where you have a clear, unobstructed view of both the auctioneer and the other bidders. Body language matters immensely. Stand tall and call out your bids loudly and clearly.
If the auctioneer asks for bids in increments of $10,000, you can just raise your paddle and agree to that increment or you can always try offering a $5,000 increase to slow the momentum – though it is ultimately up to the auctioneer whether they accept it. Projecting confidence shows your competitors that you are serious and ready to fight for the home.
4. Stick to Your Absolute Limit
It is incredibly easy to get caught up in the emotion and adrenaline of the moment, especially if you can already picture your family enjoying crisp autumn evenings on the back deck. Before you arrive, write down your absolute maximum walk-away price on a piece of paper and keep it in your pocket. If the bidding goes even one dollar over that number, walk away. There will be another beautiful property around the corner.
5. What Happens When the Hammer Falls?
If you are the successful bidder, congratulations! The theatrical part is over, and the administrative part begins. You will need to step inside immediately to sign the contract of sale and pay the deposit – usually 10% of the purchase price, unless agreed prior for 5% through solicitors or conveyancers, this is not the time for amendments to the contract so make sure these are agreed prior to auction, usually the week leading up to auction day. Make sure you have your chequebook or electronic transfer limits sorted with your bank the week prior.
While they might seem daunting from the outside, auctions are simply a transparent way to buy real estate. You can see exactly who your competition is and what they are willing to pay. Take a deep breath, trust your preparation, and get ready to secure the perfect place to call your own.
At Better Homes and Gardens Real Estate, we’re here to guide you through every step of your real estate journey. Contact us today: Find your closest agent.
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