Going Once, Twice, Three Times, SOLD – Putting your best foot forward when buying at Auction
When the demand for property is so high in Canberra (and across Australia), it is no surprise that auctions are the primary method of sale for many sellers and real estate agencies alike. Buying at auction can be quite daunting for some, as you are competing with other people in such an open forum.
Here are a couple of key pointers from our team to make the process a little less overwhelming and put yourself in the best position to secure the property you want.
Get your ducks in a row – finances and brokers
When you begin the journey to find your first home, family home, dream home (or anything in between) the first stop should be to find the right broker and get your finances in order. Having a great broker in your corner can be make-or-break when it comes to the competitive auction market in Canberra.
Your broker will meet with you (in person, via zoom or over the phone), discuss your current financial position and ask you a lot of questions in order to begin your pre-approval application:
- How much you have saved, and how much you want to have saved before buying;
- What is your work situation (permanent, contract, commission only);
- What industry you are in and how long you have been in that industry; and
- What are your weekly/monthly/annual expenses (and therefore, what can you afford to repay).
Your broker will also highlight any red flags that may prevent a bank from lending to you including financial burdens (like a sportsbet account), spending habits, suspicious transactions and if you have active debt on ‘pay-back’ accounts like After Pay and PayPal. If you don’t have a preference for the bank you get your loan from, your broker will provide you with options and explain the additional costs (stamp duty, lender’s mortgage insurance, bank fees, lodgement fees etc.). They will submit your application for pre-approval and liaise with the bank and with you to answer any additional questions the bank may have and confirm when you are pre-approved for a loan.
Once you know what your budget is, it is time to go shopping! House shopping that is.
If you don’t already have a broker or aren’t sure where to find the right one please get in touch with us, we work with some of the best in the business and see firsthand how fantastic they are at advocating and fighting for their clients (especially if things go wrong – which they rarely do with a great broker).
Have the contract reviewed
Once you find a property or maybe even a few properties that you are interested in pursuing, your next port of call should be to find a conveyancer to review the contract. This is a very important step in the process, one that is often missed when buyers are caught up in the excitement of an auction campaign. When buying at auction you do not have the benefit of a cooling-off period so, if you’re the highest bidder and you sign on the day, you’re locked in, no matter what might come up later.
A conveyancer can review the contract and will advise you on the following:
- The inclusions – what you should and shouldn’t expect to receive on settlement and what items should be included for your protection;
- The completion date;
- The particulars of the property and any restrictions on the title;
- Your obligations and liability in terms of paying a deposit;
- Your obligations and the possible penalties in terms of completing the contract;
- Your options when it comes to ownership structure;
- Any additional special conditions that are outside the standard ACT Law Society conditions of a sale contract and their cause and effect;
- The building report, compliance report and pest report and where to get additional information if there are any issues of significance noted in those reports;
- The Section 119 Certificate and body corporate minutes and information, and where to get additional information if there are any issues of significance (if the property is a Class A or Class B unit)
- The required documents contained in the contract;
- The financial implications of buying at auction when unconditional finance is not in place; and
- Many more areas of concerns for buyers – whether they are first home buyers, upsizers, downsizers or investors.
Our team takes this review process very seriously. We have seen firsthand how buyers can get burned buying at auction without having the contract reviewed or having someone to negotiate additional terms or changes to the contract on their behalf.
We can even provide advice and the necessary paperwork for buyers who wish to make a pre-auction offer. It is generally the case (especially in such a competitive market) that the seller is happy to accept offers from potential buyers prior to the auction occurring. We will always advise our buyers to discuss making a pre-auction offer with their broker first, as you may be required to exchange contracts without having unconditional finance approval place (as if you were buying at auction).
Buying a property should not be an anxiety inducing task, having the right people in your corner will make every step of the process feel easy, and dare we say – exciting!
At Aulich, our team offer one free pre-auction advice and we would love to be a part of your property journey. Get in touch with us to find out more and make us part of your ‘Dream Home Team’!