Six Common Mistakes to Avoid at a Property Auction
We’ve seen it all.
From clients who arrive at auctions to find out the minimum bid is way above their maximum budget to clients who got caught in the emotions and bid significantly above budget, and everything in-between.
Here’s what we know; auctions can get pretty crazy! The high-pressure, drama, emotions and uncertainties sets an atmosphere that favors mistakes. Some homebuyers have had quite some bad experiences at auctions and now think they’re totally a bad idea.
Well, the truth is, auctions present buyer’s with a level playing field. Plus, it could be a perfect opportunity to buy a property for slightly below market value.
So while there are risks, learning the ropes and playing the game is a good option. So here are six mistakes you should avoid at your first (or next) auction.
1. Not Checking the Details of the Sale
This is a case of lack of preparation and may be costly. Before the auction day, make sure to have carefully checked the particulars of the sale, confirm the terms and verify that the property meets your requirements.
Imagine buying a property that the particulars clearly state that you’re prohibited from making any changes to the house. It could totally ruin whatever plans to have in mind, so you’re better off knowing beforehand.
2. Overlooking Price Research
An auction is no place to make price decisions. So before heading out to one, make sure to have carried out a thorough research on the estimated price and value of the property.
Price research goes beyond looking up comparative market reports or trusting an agent’s range. Recent sales results and comparable sales analysis can help you have a better view of what a property is worth.
This saves you the headache of buying a property above market value or getting to an auction only to find out the starting bid is above your maximum budget.
3. Getting Caught In The Moment
It’s quite crazy in an auction room. The shouts, the emotions and the hopes. It’s super easy to get caught in the moment and scream an amount above your maximum budget. You don’t want to do that.
Usually, the selling agents do all they can to get buyer’s to make the highest possible offer. Novices fall prey in the bidding jungle and their finances will take the hit.
The best thing, have a solid strategy and maximum budget before stepping into the auction. Firmly resolve that no matter what happens, you’re not exceeding your maximum budget.
4. Lack of Confidence
A bidding war is a game. The confidence you exude can send a stern message to your competitors. Similarly, hesitating may mean you’re already wearing out and may strengthen your competitors.
Here’s the secret; don’t focus on your competitors. Rather, focus on your strategy and stick to it. Show confidence throughout the process and shout out your boss without batting an eyelid. This seemingly simple technique may be the difference between losing the big and being handed the keys to your new property.
5. Not Securing Finance Approval
Auctions are a perfect example of unconditional contract, that means the deal proceeds irrespective no matter what.
So, once you win the auction, sign the contract and pay the deposit, you’re expected to complete the buying process at all costs. What if the lenders fail to finance your purchase?
First, you lose your deposit and may be sued for damages. It’s easily the costliest mistake you can make before heading out to an auction.
To save yourself from this, get thorough credit assessment and full finance approval from a lender before going to battle it out at an auction.
6. No buyer’s agent.
Auctions have a quite steep learning curve. Although there are helpful tips on the post, you may be better off having professionals do the legwork on your behalf. Buyer’s agents are experienced negotiators, expert bidders and the perfect property buyers.
Significantly increase your chances of winning your next auction by getting an experienced buyer’s agents to handle everything from the planning, preparation, strategizing and actual bidding.
In case you’re wondering what buyer agent’s do, here’s a short article that answers your questions (insert link)
Tips to Help You Win at an Auction
- Get to the venue early enough to grab a seat at the front. This positions you as truly serious to win the bid. Also, the organizing agent gets to hear your bids clearer.
- Dress for the occasion. Looking professional can intimidate your competitors and increase your chances of winning.
- Don’t disclose your spending limit to ANYONE! The less they know, the better for you.
- Try to shut out from the emotions and frenzy. Focus on the organizer and your strategy.
In Conclusion
Auctions are a good option to secure a juicy property deal. But you’ve got to be careful and avoid costly mistakes. Also, applying the simple tips outlined in this article can put you ahead of the average bidder.
However, for best results, contact professional buyer’s agents to help you win bids without exceeding your budget.
Invision Properties can help you win auctions and buy the home of your dreams in a few weeks.