In Melbourne, the number of auctions taking place throughout the metro has been increasing, especially since the federal and state governments introduced new initiatives to spur housing market activity.
First homebuyers can now access deep stamp duty discounts and can better save for home loans, downsizers have more incentive to sell large homes and foreign investors face penalties for leaving properties vacant.
Auctions are popular in this state, with various suburbs recording very high clearance rates. However, participating in an auction isn’t as simple as showing up and bidding. Each state has its own auction rules, and knowing about them can save you a lot of time and hassle.
Here, we share some pre-auction execution tips you need to know before buying a property at auction in Victoria. Remember: you don’t need to be at the mercy of the real estate agent or the process. With the right tools, you can celebrate a successful auction outcome:
1. Always do your research
Study up online, visit auctions and talk to real estate agents. Keep an eye on weekly auction results and gauge the market. Go to open houses. This ensures that you have a good idea of what you’re getting and what conditions are in place for the auctions of certain properties.
2. Know the rules
The regulations that govern the auction process in Victoria are listed in the Schedules to the Sale of Land (Public Auctions) Regulations 2014. Coming into an auction aware of how you should act during the event itself will go a long way to helping you secure the right property at the right price.
3. Request a price guide
Properties for auction must be advertised with a price guide. In this state, auctioneers who skip this step could be fined. Having a price guide gives buyers a good idea of how values in the area are going, and keeps you from overbidding unnecessarily.
4. Note: Pre-registration is unnecessary
Interested buyers don’t have to register beforehand to bid on a property. This gives you the upper hand if you see a home for sale by auction and you don’t want to show your cards to the vendor.
5. Know how the game works
There are no limits on bidding – even for vendors. This gives you room to play a little looser on your bidding strategy, although it can also work against you in that a competitor’s ability to bid more times could cause you to lose out. Furthermore, there are no restrictions on how many vendor bids can be placed, so you could be out of luck if you hoped to get the property below reserve price.
6. Consider making a pre-auction offer
If you really want to limit your competition before an auction, check if the vendor is open to pre-auction offers from buyers. To do so, you offer a signed contract and proceed to negotiate as in a private sale transaction. If your offer is accepted less than three business days before the auction date, however, you waive your right to a cooling-off period, meaning you can not change your mind.
It’s important to keep in mind as well that it’s all about what you will be getting at the end of the day – so pay attention to the condition of the home and the contract you’ll be signing, because there’ll be no going back.