Melbourne has the highest proportion of property sales by auction of any capital city, averaging over 30 per cent, according to CoreLogic Data. If you’re looking to buy property here it’s essential that you understand how auctions work, so get started by checking out our tips on preparing to buy a home at auction.
Experience the home yourself
Once you make the highest bid and win at auction you’ll sign a contract to purchase the property right away – there’s no going back. That’s why you need to experience the home yourself before auction day.
When you do, listen for noise from nearby houses and businesses, think about whether there’s enough room for your family, consider how much sun it will get throughout the day and get to know the surrounding neighbourhood.
Perform necessary property inspections
When the hammer falls it’s too late to check the condition of the property. Save yourself the chance of buying a lemon and complete all pre-purchase inspections before attending the auction. This should include:
- Building inspections.
- Pest inspection.
- Understanding of any flood and fire risk.
- Zoning and council permits.
- Building permits.
- Understanding of the owner’s corporation for apartments.
These inspections will come at a cost, but could save you thousands of dollars or more when buying Melbourne property at auction.
Get finance pre-approval
If the bank won’t provide you with finance after you’ve won at auction you may forfeit your deposit. Don’t risk it – get finance pre-approved before you attend the auction and never exceed the pre-approval amount when bidding. You should speak to your bank or mortgage broker to arrange this before you start searching for properties.
Do your market research
Before the auction it’s important that you’ve done sufficient market research to ensure you’re paying the right amount. To do so:
- Look at the selling and asking prices of similar properties in the immediate area of the one you’re considering.
- Find out whether demand is high or low in the area – high demand means properties may sell for more.
- Look at recent price growth data in the area.
- Speak to a real estate agent for more insight into the local market.
Once you fully understand the market you’re buying in you can be sure that you don’t underbid or overpay.
Understand the contract
One of the most important parts of your due diligence is understanding the contract. Have a solicitor or conveyancer go over the details to flag anything irregular and explain your obligations if necessary.
If you need help navigating your first auction and finding the ideal property, get in touch with the friendly team at your local Brad Teal office.