We recently had Mark Sumich from Sumich Realty present to our team on the current auction environment. The property market is extremely hot right now and auctions are very popular so we thought we would share some of our key takeaways.
Know what the house is worth to you
Look at recent property sales in the area to get a good grasp of what the property you are interested in could sell for. Knowing the market will help you bid confidently. Keep in mind that even with an unlimited budget a property is worth different amounts to different people for all sorts of reasons.
Mark Sumich: “real buyers know value. They know what it’s worth, and what others think it’s worth.”
View other auctions before bidding for real
Auctions can be over in less than 7 minutes. Viewing other auctions will help you understand the process and get to know the jargon auctioneers use. Auctions are pressure cooker environments so get as familiar as you can with the way they’re run.
Know your competition
A good way to gauge how many people are seriously interested is by asking the real estate agent how many building inspections have been done and how many registered bidders there are.
Register as a bidder
Let the real estate agent know you are interested and looking to bid. By doing this you make sure that if there are any changes, like the auction being brought forward, you are kept in the loop.
Mark Sumich: “the agent will also let the auctioneer know, so he can keep an eye on you and look out for your bids.”
Get your finances sorted
Auctions are unconditional. If you win, you are required to sign the paperwork and pay the deposit. Mark commented that it's tough for first-home buyers with less than a 20% deposit due to the valuation requirements, so a good mortgage broker is very valuable for these clients. That's why it’s important to confirm your finance before attending the auction.
Go in with a game plan
What kind of bidder do you want to be? If you’ve been to a few auctions before, you’ll know the different types and their strategies. Will you make an eager first bid to get it started or will you hang back and wait until the last moment to strike? If you think the exercise may be too nerve-racking, consider using a professional bidder or ask your real estate agent to bid on your behalf.
Mark Sumich: “have a strategy – get some numbers in your head: the one you are excited about (what you think it’s worth), the one where you are happy you don’t have to continue house hunting, and the one you’d feel painful about the next day.”
Being confident will work in your favour every time. Watch the room. Find a place you can watch your rivals from, and analyse their body language. Be aware of yours, too: other bidders and the auctioneer are all watching.
Know your limit and stick to it
If you don’t have a limit, you could end up with a much bigger financial commitment than what you were prepared to take on.
Mark Sumich: “mortgage brokers work with real estate agents to help their clients. They can ask a trusted real estate agent if they think their client would be able to buy a certain property at a certain price.”
As experienced mortgage specialists, we understand that to get the joy of a new home, you first have to be successful in an auction. Participating in auctions can be stressful, especially if you are not familiar with the way they work. At Apex, not only will we assist with your pre-approval, we’ll be happy to share some of our experiences and thoughts to help you get the house of your dreams.