While auction is not as prevalent a sales method in WA as it is in, say, Sydney, it is a great method to build momentum and drive interest for a property, so it is perhaps not a surprise to see auction becoming a more favoured option in today’s Perth market.
As a buyer, buying at auction means that you are directly and openly competing with others, and while everyone knows to importance of setting a budget (and sticking to it at auction day!), it is just as important you understand some of the basics of buying at auction prior to making a bid.
Listed below are 7 important facts that you need to know before placing your bid:
- When you bid at auction, you are buying on a cash, unconditional basis. That means that your offer is NOT subject to finance or sale of your home or even a building and white ant report.
- Do your inspections PRIOR to bidding. If your bid is accepted by the auctioneer, even if faced with a negative building report, you will still be obliged to honour the sale. Therefore it is advisable to do your due diligence prior to auction day. Yes, this may waste money should you not end up getting the property, but a larger risk is finding out there are problems later!
- Be wary of deposit requirements “at the fall of the hammer” – they range from 5% to 10% of the purchase price, so make sure you are able to pay for this straight away!
- Bidding can be done by raising your hand, speaking up or simply nodding at the auctioneer when he looks at you.
- Once the reserve price is met, the property is “on the market” and the highest offer over the reserve price will win the auction.
- The reserve price is confidential between owner and auctioneer, and not all auctioneers will proclaim at the highest bid that the reserve price has been reached. To make sure you don’t miss out, bid before the 3rd strike of the hammer!
- If a reserve price is not met, the highest bidder gets to see the reserve price and has the first right to accept and buy the property at that price.
Should you have any more questions regarding buying at auction, why not get in touch? Bourkes employs 2 licensed auctioneers (and has a third one in training) who are more than happy to answer any questions you may have! Simply fill out the form below!