Fast-talking auctioneers, grim-faced bidders and an open-ended price point can make auctions a terrifying experience for the uninitiated. Nevertheless, they are becoming an increasingly popular method of sale in Aotearoa, with the number of dwellings sold by auction increasing by 45 per cent in the 12 months leading up to January 2017, according to figures collected by the Real Estate Institute of New Zealand.
Being auction savvy has never been more important for first home buyers in New Zealand. Here are three tips to get you up to speed:
1. Do your homework
Before heading along to the auction, it’s important to research sales figures of homes in the area and get a good idea of the property’s capital value so that you can set yourself some bidding limits.
“Come to the auction with three prices in mind. One you’d like to pinch it at, one what you think it’s worth and one that you might be prepared to pay for it,” advised veteran auctioneer Mark Sumich, speaking with Metro.
2. Be confident
Fake it till you make it. Nobody else at the auction knows your budget or your property-buying experience (or lack thereof). Claim a visible spot, stand proud and use a confident voice when bidding. If you’re within budget, try bidding in large increments to put pressure on the other buyers.
3. Understand your financial obligations
Most auctions require you to bid on a cash unconditional basis and pay a 10 per cent deposit the moment the auction ends, so you’ll need to have finances sorted in advance. Pre-approval can be arranged with your bank or through a mortgage broker – just be sure to compare New Zealand home loan rates between providers to ensure you’re getting the best deal possible for your circumstances.
When you are ready to attend an auction, talk to an expert to get a pre-approval, their service is totally free! If you need to see what you can afford, check out our mortgage calculator.
The PocketWise Team