Tom Sawyer

Has anybody bought their home at auction? We are going after a house this weekend and not looking forward to it due to the uncertainity, despite having all the inspections done (and paid for ) we still can't tell if anyone else is intererested or if we are in with a good chance. Any tips how to get inside info and what to watch for on the day.

Hutch

I went to a couple and wasn't convinced that it was the best way to buy a house. Anyone, including the property's owners can bid, it even has a name 'Vendor bidding'. 'Dummy' bidding is supposed to be illegal but undoubtedly does on. Plus the auction company have all these fixers that go out amongst the crowd, home in on the serious bidders and offer plenty of helpful 'advice' such as 'do you want to lose it for the sake of $500, go on bid' etc. If you set yourself an absolute upper-limit and stick rigidly to it, then you might be okay, just try not to laugh at the auctioneers who sound for all the world like a ringmaster at a circus.

walla

Go to an auction that sells ex Government vehicles, they're all very well looked after and most have low kilometres.

Wol

I can confirm this: I saw blatant dummy bidding, false phone bidding etc well after the practices were supposed to be illegal. Also agents circulating amongst the bidders, talking up the bids to the point where the people left were clearly in over their heads and sweating like pigs!

If you enter a low bid you have registered with them - if it doesn't sell they will be all over you like a rash and you are in a bargaining position from that point on.

flip

If you really are nervous get yourself a buyers agent - they can bid for you. Ours cost nearly $2000 which seems steep but we had peace of mind and didn't do anything too stupid and when we were spending over $600k it seemed money well spent. It's more expensive to use them if they have to do a search for properties but they can give you excellent advice. Ours was Australian Property Buyers based in Melbourne - they were fantastic and we think we must have got a good deal - the agent had to give up some commission to breach the gap between our offer and their minimum.

ossigeno

It will probably go for 30% over the price being quoted by the agent.

Personally I would not buy at an auction in the current market. Any house I was interested in I would put an offer in before the auction.

Tom Sawyer

We already have and they turned it down, so have no choice but to go to auction and suffer it's vagries and sharp practices. I think we will sit tight and not make a first bid unless it is absolutely necessary. Don't think it will go for over 30% of the guide price as it does seem realistic for the area, if anything it is $20K over.
The actual bidding doesn't bother me, it is all the uncertainity and shady dealings that concern me the most. We know our limit and will not go over it. I just wish we knew whether we are in with a genuine chance or just the agent soft soaping us to try and a bidding war going in a soft market.

Hutch

End of the day, that's their job. They're working for the vendor, not for you, and they'll try everything they can to get the eventual price tag as high as possible.

ScottDavis

Is the dummy bidding illegal in Oz, because my wife and I watched an episode of 'Location, Location' recently where they even pointed out the auctioneer was using a dummy bidder to get the price up a bit. They made no objectionable comments to his practice. I doubt he's still practicing if it is!

Wol

It's illegal in NSW but still goes on. The fine is I believe $20k *IF* you're found out and the charge sticks - so if you are fined every ten times it's a $2k expense per auction and worth every penny!

flip

For Victoria

Dummy Bidding

Not illegal in Victoria but maximum of 2 Dummy or Vendor Bids

Reserve Price

On Section 32 (legal document provided by Vendor and available from real estate agent) details inclusions, whether on septic tank, water suppliers, etc. You'll also be told the rateable value or the value the council put on the property. That figure will usually be the reserve price (apparently) so if you find out that figure it should indicate the price they're actually looking for.

Even if you win the bidding they may take you into further negotiations to bring you closer to the reserve price.

Offers before auction

Apparently offers before the auction won't often be considered if they're way below the reserve price but if it's early days and there hasn't been a lot of interest you could be in with a chance.

General Value

Read quite a lot of books on buying real estate in Aus and generally the advice is to look at plenty (up to 100) in your 3 top areas and see how much they're marketed at and how much they achieve so that you'll have a much better idea of the value of the property you choose eventually to buy.

Good luck and have fun - buying at auction is nearly as scary as getting on the plane to come out here.

ossigeno

Let us know tomorrow how you get on. I've been to a few now and all have gone for 25-30% over the upper quoted price.

The current sellers market will turn into a buyers market for those patient enough. Then is the time to be merciless on sellers and agents.

ossigeno

So how did the auction go? Did you get lucky?

Budgie

As long as you've done your research and know what sort of price it should actually go for, and you've set your limit (and stick to it!) - then go for it! Just remember to walk away when your limit is reached!

Tom Sawyer

OK, auction was today (Sun), we were the only bidders on the day, although 4 others registered. The house was passed in on our best bid, which is $85K below reserve, which is very, very unrealistic. We will not increase our bid as we feel that we are on the money having done our research.
No doubt the agent is now ringing round the other registered bidders to try and get a bigger bid from them.
Overall we are not enamoured with the whole process, the vendors turned down our first offer prior to auction as they wanted to go to auction, and then they do not like what the auction market tells them. And of course there is everything going behind our back. Overall it is not a very upfront process, much prefer the private treaty method.
We will have to wait and see over the next few days..................