Property Investment Tips: Purchasing property at an auction

By the resi financial blog team, 30 January 2014

Should I buy a home at auction

There are a number of reasons why someone would want to purchase property in Australia today. With the market currently resting at a strong spot, now could be a great time to secure an investment property or pursue your very first family home - especially with the cash rate still trending historically low.

However, in this day and age, the chances of you coming up against an auction scenario are becoming more and more likely, especially in some of the capital cities likes Sydney, Melbourne or Perth.

If you're unfamiliar with the protocol for these situations, going blindly into an auction can be a daunting experience. With the number of different things to be aware of, it can be overwhelming and confusing. But taking the time to understand the various ins and outs of an auction can help you to succeed.

Early preparation

Like all major investments, doing your research is crucial to helping you achieve success. A preliminary look into the market will aid your experience and help you find the perfect real estate option for you.

But this doesn't just extend to finding a home.

Looking into the various home loan options available to you should be a top priority as well. After finding a home you like the look of, getting in contact with a financial expert should be the next step on your agenda.

Discussing the mortgage options that could work for you and finding the best one possible will help to streamline the process. Getting a preapproval is part of this.

Basically, this means the lender will give you a commitment of how much you can borrow, allowing you to base your plans around your financial situation.

This is essential - especially in auction situations - where time is of the essence, with many vendors expecting to finalise the sales almost immediately following the proceedings. If you're unwilling or unable to commit straight away, you run the risk of losing the property.

Establishing financial limits

As the auction begins, it can be easy to get caught up in the competitive atmosphere of the experience. With a number of people all battling vehemently for a single property, these situations can escalate quickly.

During these times, it can be easy to get swept up and lose sight of your goals - including any budget you may have set for yourself. But it's important to remain detached from the property and not exceed your financial limitations.

After all, it's better to miss out on a single property than to win it but be left in a difficult financial situation without any way of getting out of it.

Categories: Home Loans, Property Investment