Auctions – How they work for you as a buyer!

Many buyers seem to have a fear of auction either because they feel they will need to outlay money ‘before’ knowing they have secured a property or because they feel they may be pushed into paying more for the property than they would like.

To address the first concern – outlaying money on building reports, LIMs, etc. EVES auction properties include a recent LIM report and property title. We like to support buyers where possible by having owners furnish buyers with a current building report, although unfortunately this is not always the case. In these instances, it may be helpful to know that Registered Building Inspectors will undertake verbal reports, which is not only a little cheaper but can also be utilised for last minute inspections. It should be said however, that best practise is definitely a full written report!

In regard to paying more than you may be comfortable with, auctions are the most transparent method of sale and unlike a Tender, Deadline sale or a Multi-offer, you will see exactly what your competition is prepared to pay. With Tenders etc, offers are presented to owners in sealed envelopes and you will not know if your offer is $1000 too little or $20,000 higher than other offers.

To be totally prepared for auction day, you should give serious consideration to where you would like to start (open) the auction. Taking the opening bid gives you control in an auction room by sending the message that you are serious about purchasing the home and this is a strategy that can shake the confidence of other buyers. Furthermore, know your absolute maximum figure. By knowing this and adhering strictly to it, you will never pay more than you are comfortable with.

Vendor bidding can be another misnomer with buyers. An auctioneer cannot bid at, or beyond the reserve set for a property. If he did, and no buyer progressed the bidding, the auctioneer would have bought the property himself. This would never happen!

An auctioneer uses vendor bidding when there is just one buyer bidding. It is used to advance the buyer into a position of negotiation with the vendor by saying, ‘your bid is not at a level close to where a vendor would consider selling’. If he did not do this and the auction passed in unsold, an unconditional buyer has lost their power as they move into competition with all conditional buyers.

As a method of buying, auction is a very transparent way of purchasing, particularly when in competition with other buyers!