Embarking on the journey of buying or selling a home at auction in Melbourne demands a nuanced understanding of the auction process. This guide outlines top tips to navigate the competitive terrain, from identifying auction types to the nuances of strategic planning and property evaluation. There’s a few tips in here for sellers too, so continue reading.
For Buyers
1. Understand the Auction Process:
Grasping the auction process is pivotal. Melbourne’s auctions are categorised mainly into three types: Minimum Bid Auctions, Absolute Auctions, and Reserve Auctions.
- Minimum Bid Auctions: These start at a set price, and bids can only go higher, ensuring the seller receives at least the minimum bid price.
- Absolute Auctions: The property is sold to the highest bidder, regardless of the price, with no minimum bid or reserve price.
- Reserve Auctions: The seller sets a reserve price in secret, and the property is only sold if the bidding reaches this reserve price.
Each type requires a different bidding strategy. For instance, understanding the seller’s motivation in an Absolute Auction can help you gauge how much to bid while knowing the market value is crucial in Reserve Auctions to understand when the reserve might be met. Talk with the Auctioneer or Real Estate Agent prior to the Auction to understand how it will be run.
2. Setting a Maximum Bid:
Defining your financial ceiling is crucial to avoid overbidding, and ensuring you stay within your budget.
3. Research and Observation:
Diligent market research and attending auctions for observation are critical. Seeing an auction in action as an observer, instead of a participant, will equip you with insights into auction dynamics, aiding in the formulation of your bidding strategy.
4. Financial Preparation:
Securing pre-approved financing and acquainting yourself with all related costs—including stamp duty and legal fees—is essential. This preparation safeguards against unforeseen financial strains.
5. Property Inspection:
A meticulous inspection of the prospective property is advisable, enabling a realistic understanding of any potential repairs or renovations.
6. Engage an advocate or friend to bid:
If you feel you might have difficulty managing your emotions and staying within your budget on auction day, consider engaging a professional or asking for help from a friend who won’t be carried away with the dynamics of the day and bid over your limit.
“For both buyers and sellers alike, two key elements rule auctions – Emotion and Money! So both need to know their numbers, be realistic and stick to their plan. That’s where the emotion comes in. You must know how to manage your emotions on game day so that you can stick to your plan.” says Simone Chin, Auctioneer & Agent
For Sellers
It’s just as important for sellers to prepare themselves for the auction process:
1. Be realistic:
Set a reserve price with your agent and family that reflects current market conditions.
2. Create a list:
Include your reserve price, settlement terms, and other caveats. Know what you are prepared to negotiate on and what you won’t.
3. Put your best foot forward:
Ensure your property is well-presented to attract the highest bids.
4. Manage your emotions:
Practice stress relief strategies, like meditation, prior to the auction so you can make rational decisions.
Navigating Melbourne’s auction landscape transcends mere bidding; it involves thorough preparation, financial planning, and an in-depth understanding of market dynamics. Armed with these insights, you’re poised to make informed decisions on how to buy or sell a home at auction.
Consulting dedicated real estate resources can further enhance your understanding, and remember, there are plenty of other ways to buy or sell a property too! We recommend that you learn about auction alternatives because you never know what opportunity will arise.
The auctioneers at Atria Real Estate, Simone Chin and Russ Enticott, bring a wealth of experience and a personalised approach to the auction process. Their expertise can guide you through each step of an auction. Working with knowledgeable auctioneers like the team at Atria Real Estate can offer a distinct advantage in navigating the competitive Melbourne real estate market so give them a call at 03 8680 9421.
