How to bid at auction

Buying your first place at an auction can be a stressful experience, but with more homes being sold this way, it could be an inevitable part of your first home buying journey.

There are critical steps you can take to become more comfortable with the process and ensure it's as stress-free and, hopefully, successful as possible:

PRE-AUCTION

Finance
Make sure your finance is in place prior to auction. If your deposit is in a fixed term deposit, ensure these funds are available and your finance is in place - consider pre-approval. Identify the maximum price you're willing to go to and don't go beyond this amount.

Contracts
Engage a solicitor to handle the legals on your behalf and request from the agent the contracts. Have your solicitor review these prior to auction to ensure everything is in order.

Property inspection
Do your homework on the property. Your time may be limited but it's a great risk to skimp on undertaking property inspections and obtaining the necessary reports (pest inspection, building/structural report etc.)

Do your homework
Do your homework on the market. Find out the value of other similar properties in the area, so you have an idea of the property's true value. Also it pays to research the agent handling the sale of the property. What other properties have they recently sold? Don't rely solely on what the agent tells you - draw on your own research as well.

Support on the day
Undertake self-analysis to establish whether or not you are up for the challenge of bidding at auction. If you don't think you can cope, take someone with you for support on the day. You could even pay a professional (buyer's advocate) to act on your behalf (though make sure the auctioneer is informed of this).

ON ARRIVAL

Register your interest
On arrival make yourself known to the auctioneer and register your interest in bidding at the auction. If you are not doing the bidding yourself, advise who will be acting on your behalf.

Position, position
Position yourself where the auctioneer can see you. It's a simple, practical step to ensure your bid is not missed.

Be alert
Be aware of tactics being used by the auctioneer and the other bidders and remember the vendor is allowed to place a bid, but that it will be declared as such by the auctioneer.

DURING THE AUCTION

Timing
Don't bid too early!  An auction usually operates in  several phases; the first is merely a tool to attract bidders into the fray and get bidding up towards the seller's reserve price. Wait until the auctioneer makes a declaration such as "on the market".

Odds and evens
It can also be a useful exercise to bid an uneven amount of money, say $111,000 instead of $110,000. That extra $1000 might just enable you to nab your property at a competitive auction.

Stay in control
Remember, a bid is legally binding, so don't let your heart rule your head and stay within your budget.

Relax
Be relaxed. If you have done your homework and are in control, auctions can be enjoyable and rewarding.

Win win
If you win the auction, be prepared to put down your deposit (usually 10 percent) on the day. The deposit will be held in trust until settlement occurs. You can also organise insurance to protect your interest in the property.

WORKBOOK/CHECKLIST

• Do you have approval or pre-approval for finance?
• What is your limit and are you prepared to stick to it?
• Do you have a copy of the contract for the property?
• Have you had your solicitor check the documentation?
• Have you done your research on the market?
• Have you inspected the property?
• Have you registered yourself with the auctioneer?
• Are you standing where the auctioneer can see you?
• Are you ready to sign on the dotted line if you win the auction?