How to buy a house at auction

There is nothing better than finding your dream home, but sometimes buying it doesn’t seem as straightforward as we had hoped. What makes it seem this way? One little word… Auction.

The truth is buying a property at auction in New Zealand doesn’t have to be a scary or daunting process. In fact, if you follow all of these steps and prepare yourself for the auction, it can be easy and very rewarding. Here is what you need to do…

 

Sort out your finances

On auction day, you must be in a position to bid on a cash unconditional basis. Prior to the auction, you should speak to your mortgage broker and seek pre-approval while you are discussing your options. This means you know exactly how much your limit is when bidding which is a great position to be in.

 

Get to know the property

If you have found a property you would like to bid on and ultimately purchase, you need to do a few things…

  • Obtain a Land Information Management Report
  • See the property
  • Obtain a Building Inspection Report
  • Understand your obligations as homeowners including payable rates

 

Develop a strategy

Bidding isn’t always straight forward – do you highball, lowball? Do you raise your price in increments of $10,000, $1000 or $100? You should speak to a trusted real estate salesperson to help you with your bidding strategy as they may provide you with some detail about the approximate price bracket it could sell for, and give you a good idea of where to start and how to go about the bidding process.

 

On the day: Bidding time!

The auctioneer will ask you for an opening bid and will then nominate the increments by which the bidding can be raised. Simply attract the attention of the auctioneer by: 

  • Raising your hand 
  • Calling out your bid 
  • Nodding your head when you catch the Auctioneer’s eye. 

 

If you are the successful bidder – what now?

 

If you are the successful purchaser you are required to sign the auction purchase contract and pay 10% of the purchase price paid as a deposit; either by bank cheque or personal cheque. Settlement date is often flexible. You should discuss this with the salesperson prior to the Auction commencing.