Going once, going twice . . . how to make it yours
Real estate auction rooms can be daunting. Colleen Hawkes has the best plan of action for when you really, really want that property.
Who’s more nervous at an auction – the vendor or the purchaser? If you really have your heart set on a property and the only way to secure it is to buy under the hammer, then you will definitely be more nervous than the vendor. And there will be others at the auction who feel exactly the same, which will add to the anxiety.
So how do you make sure you secure the house of your dreams for a fair price?
We will assume you have your finances sorted in advance.
Steven Glucina of LJ Hooker Ponsonby says if you’re a first-home buyer, it’s a good idea to find a competent mortgage broker, so you know exactly how much you can borrow.
It’s also helpful to have some ‘‘wiggle room’’. ‘‘This is where the bank of mum and dad or a fairy godmother comes into play for young people,’’ says Glucina.
‘‘We are seeing a lot more financial help from parents today.
‘‘It really helps to have a fighting fund, because you just might need that extra $5k or $10k to seal the deal.’’
Barfoot and Thompson auctioneer Marian
Tolich believes it’s important to establish that topdollar figure, one that you wouldn’t top with another $500.
‘‘Once the auction is over, if you have missed out, at least you will know you gave it your absolute best,’’ she says.
‘‘And don’t be deterred – believe me there is always another one.’’
The auctioneer says bidders are now more prepared for auctions than in the past, and have a strategy in place.
That includes the way they dress. ‘‘I had one unsuccessful bidder tell me that as soon as they saw the smartly dressed bidder they felt they would miss out. So I would say, always dress for success.’’
Be a participant, not an observer
If you want the house, you have to bid – sitting back and waiting to see what happens doesn’t work. You may even blow your chances completely.
‘‘You have to get the ball rolling and you should come back pretty quickly with your bids,’’ says Glucina. ‘‘Show some authority and don’t muck around. And make sure the agent knows you are interested – agents are your friends.’’
Tolich agrees. ‘‘If you sit back and wait, you won’t get into the groove and you will find yourselves thinking, ‘Shall we jump in now?’
Before you know it you are feeling left behind.
‘‘It’s important to let other buyers know you are serious.
‘‘You shouldn’t need to hesitate because you know your absolute limit.
‘‘And don’t have a conversation between bids because that shows weakness. Make the bids in bold increments – if a bidder calls out $5000, make your next bid $10,000.
‘‘Bidding from the start will also ensure the auctioneer is focused on you.
‘‘People have been overlooked when they have made late bids because they never came to the attention of the auctioneer – they left it too late to be noticed.
‘‘It’s important to let other buyers know you are serious. Make the bids in bold increments – if a bidder calls out $5000, make your next bid $10,000.’’
Steven Glucina
LJ Hooker Ponsonby
‘‘Coming in with a late bid can be very risky and you need nerves of steel.’’
Too little too late
Glucina agrees that while buying at auction is all about psychology, it doesn’t pay to try to be too smart.
You need to be holding the top bid if you want to negotiate with a vendor when a property fails to sell at reserve.
It is not uncommon for people to miss out because they think they will be able to negotiate later, but if they don’t hold the top bid that is unlikely to happen. Buyers have been known to call later offering more, hoping that maybe a postauction sale has not eventuated, only to find the deal has been done.
Glucina says there is a misconception that if a house fails to sell under the hammer, it will sit around and there will be plenty of time to do a deal. ‘‘The pendulum has swung back in favour of the vendors in sought-after areas.’’
In Auckland, properties around the milliondollar mark are especially competitive.
‘‘I had the first open home for a house in
Ma¯ ngere Bridge last week and I had 20 groups through in half an hour on a Wednesday night. I have never before had that number turn up for a first open home in the middle of the week.’’
Hidden costs of buying or not buying at auction
Buying at auction may not suit everyone. If you are a first-home buyer you might find auctions extra tough financially. By the time auction day rolls around you will have already spent hundreds of dollars, if not more, on builder’s reports and lawyers (as will other buyers). And it’s possible the bank might want its own valuation, which will be an added cost.
That money is gone in a flash if you fail to secure the property.
One first-home buyer Stuff spoke to said she and her partner were spending $700 to ‘‘not buy’’ a house at auction, and decided to stop attending auctions because they couldn’t top the competition and their money was disappearing. Their bank accepted property valuations provided for each house, so at least they were saved that cost.
They have since bought their first home by negotiation and will be moving in next month.
But, with auctions an increasingly popular way to sell, there’s a strong likelihood that the ‘‘house of your dreams’’ will go under the hammer.
The REINZ says 14.1 per cent of all property sales last month were houses sold at auction, compared to just 2.5 per cent the year before. So, best be prepared. The government provides a detailed checklist for auction buyers on settled.govt.nz