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Buying property at an auction

27 Sep 13

Buying a home at an auction can be an exciting and nerve-wracking experience. If you're about to take the plunge or you have an interest in the industry, take a look at the following real estate tips.

Get legal advice

If you're serious about buying a home, seek assistance from someone who specialises in real estate law. Go over the contract for sale with them and make sure you have a full understanding of your obligations if you end up winning the auction.

Your advisor may suggest additions or changes to be made to the agreement, which both parties' solicitors can discuss. Make sure you're clear on exactly what is included in the sale, including chattels and furnishings.

Come prepared

If you place the winning bid at an auction, you have entered into a binding contract. This means you need to sort out your finances before it comes time to bid. You'll need a written loan approval before the auction takes place, so it pays to contact your lending institution when you begin searching for your new property.

If you win the auction you will be required to sign the contract and pay the deposit, which is usually 10 per cent of the property's purchase price, on the day. Make sure you have all of this in order to avoid any last-minutes stresses ruining your big moment.

Know when to bow out

Set a price limit before the auction to avoid going over budget in the heat of the moment. If the bidding reaches your set limit, don't be tempted to bid higher than you can afford. If you think you'll get carried away as the bidding heats up, step out of the room to avoid committing to a home that's out of your price range.