For any potential property investor, the auction can be an exciting time. You’ve done your research and now it’s time to go and throw your hat into the ring for an investment property. While it’s exciting it’s also a path that can be fraught. You need to do your research properly to get the most out of any auction, and you also need to have your wits about you to make sure that you’re getting the best possible deal.
You can’t cut corners on something like looking for a house, because it’s one of the biggest purchases you’ll ever make in your life and you need to make sure you’re totally ready, both financially and in terms of the preparation. There may be things like significant structural damage or compromise that you need to take into consideration when making your offer on a house, so you need to make sure you know how to find out about that sort of thing, and how you need to make your bid based on other property prices and what you need to do on the house to fix it up, if it’s a property that you’re buying to renovate.
To get your head around the prices of property and what is suitable as an offer you need to start researching the market to find out what is selling at what price. A good place to start is online, and if you research 10 properties a week for 10 weeks you’ll knock over 100 houses. It might sound like a lot, but when you consider that the research you do has the potential to save you hundreds of thousands of dollars it makes for a worthwhile investment. A benefit of engaging a buyer’s advocate means that you don’t have to do any of this research, as the buyer’s agent will look at the houses for you, and then select properties based on your specifications and present them to you. Regardless, it’s worthwhile knowing how the process works, so I’ve outlined three possible scenarios that you can get tripped up in as a new auction bidder, and they’re things to be aware of for any new property investor in Melbourne.
GETTING CARRIED AWAY
Everyone wants to win and unfortunately auctions can quickly turn into an expensive game or an ego play for inexperienced and emotional bidders. One extra bid can quickly snowball into a handful of extra bids – and this behaviour can result in you paying a price way above what you anticipated, above fair value and beyond your means.
If you’re the kind of person who gets carried away in the moment, then get engage a trusted friend or family member or a professional buyers’ advocate to bid at the auction for you. You won’t regret it.
FORGETTING THE SELLING AGENTS’ ROLE
You need to remind yourself that the selling agent is only ever acting in the best interest of the seller, and not of the buyer. On the day of the auction, don’t let the selling agent pressure you into increasing your bid if they can’t keep things moving.
If you’re the highest bidder and the property isn’t on the market, simply allow the property to be passed in and focus on starting your negotiations again in the post auction environment. Stay focused on the task at hand and don’t get trapped into bidding against yourself at auction. For property investment Melbourne you need to think with your head, and not get carried away.
Bidding up against yourself happens more often than you might think at auction and it usually comes down to a simple error often fuelled by the flurry of activity at the final call – the highest bigger isn’t sure if they’re still the highest and they raise their bid. So keep your wits about you.
NOT GETTING PROPERTY INSPECTIONS
Imagine this: You’ve previously paid for pest and building inspections on two properties that you’ve not gone ahead on buying. You’ve then found another property but you’ve managed to convince yourself that you don’t need the check this time around because the last two came back fine. You might have fooled yourself into thinking these inspections aren’t really necessary. Well, think again, because you absolutely need to know what you’re buying.
The property might be riddled with termite, the construction might be in need of repair or poorly done, or the wiring and plumbing may be faulty. Any of these major faults will cost a significantamount of money to fix and you need to factor this into the equation when you’re placing your bid on a property.
If you’d like to know more about auctions and how to get the best investments, register here for your complimentary and obligation free session with one of our property experts. We can save you the hassle of research, bidding and negotiations, and we can do it all in a hassle free way leaving you free to focus on the more important things.