If you are looking for a way into the property market, auctions can offer a chance for a good deal. But Real Estate Institute of Australia president Adrian Kelly urges buyers to be informed before they jump in and start the bidding.
Know your market
There are different requirements on whether a seller must set a price guide ahead of an auction dependent on which state the auction is being held in. In Queensland, it is illegal to provide a price guide ahead of an auction, whereas in Victoria it is required. In NSW, setting a price guide is at an agent's discretion.
But, price guide or no price guide, it is important for buyers to do their own research, Mr Kelly said.
"At the end of the day, it will be the buyer who is laying out their hard-earned money and it is the buyer who will determine the price," he said.
"Do your homework and get used to the process."
Do your leg work
A bid at auction is binding, so before you raise the paddle or your hand at an auction, make sure you have everything organised for the sale.
Finance is the number one most important factor. Make sure the pest and building inspections are done beforehand and make sure you are in a financial position to make the purchase.
Introduce yourself to the agent and auctioneer ahead of the start of the auction.
"That way you can disappear into the sidelines, but the auctioneer will keep an eye out for you. They will know you're interested and there to bid," Mr Kelly said.
Some states require you to register your attendance and take a number or paddle to participate. Make sure you are aware of the rules regarding registration in your area.
Mr Kelly advises bidders to get in a couple of bids early to let everyone know you are serious. By the same token, don't offer a bid of $500 if the bidding is progressing by leaps of $10,000. Offering small bids that are certain to not be successful slows the process down and won't win you any friends at the auction.
Know your limit
Auctions can be exciting, but it's important to know when to put down the paddle.
"Know what your limit is and be prepared to have a second limit if you need it," Mr Kelly said.
If bidding fails to reach the reserve price, the property may be offered to the highest bidder at the reserve price, or a bidder may choose to make an offer for the seller's consideration.
While it is a good idea in this case to have been the highest bidder as you would be likely to be offered another chance at the property, Mr Kelly warned that anyone was free to make an offer after the property was passed in.
Get a rep
If the whole process is too stressful, get a professional in your corner to handle the whole bidding process. Armed with your limit, they will handle all of the auction-day action for you.