How to approach an auction in Western Australia

Auctions are not as popular in Western Australia as they are on the east coast - particularly for properties priced at the lower end of the market, but they can be a very effective way to buy and sell property.

If you are considering purchasing a home through auction, there are a number of things to take care of and to be aware of in the lead up to the auction day.

Do your research

Before deciding to bid at an auction, it's important to do your research on the property and the surrounding market, and to have a good understanding of how an auction unfolds on the day.

One of the best things you can do prior to being involved in an auction, is to attend a few auctions beforehand so you get to see for yourself how the process works. Auctions are quite an unfamiliar selling method for most West Aussies, so give yourself the upper hand by doing your due diligence on the process.

You should also inspect the property at least once before you consider bidding, and be sure to ask the REIWA real estate agent any questions you have.They will know the ins and outs of the property, and will be able to answer any questions you may have.

Normally the buyer would not be able to attach conditions to the contract, so you will be buying the property in the state and condition that is presented in. Therefore, it's important you undertake any inspections of property prior to entering into a contract so that you understand exactly what you are buying and what work you may need to do following the purchase.

Get your finances in order

Most sellers at auction will not enter into a contract that is subject to finance approval. When going into an auction, you want to be confident in your financial position, so make sure you have access to finance and that you know how far you can extend yourself. Set a maximum price limit for what you're willing to spend on the property, and be sure to stick to it.

Understand the auction form

As a prospective buyer at an auction, you should request to view a form called the 'Auction Particulars and Conditions of Sale of Freehold Property'. This is the contract that you will be asked to sign which include any relevant conditions that will apply to the sale.

Be sure to thoroughly read through this auction form to make sure you are familiar with and understand all the information within the form. Be sure that you can meet the settlement date that the seller is placing on the contract.

Deposit

The auction conditions will normally define the amount of deposit that will be required to be paid upon the 'fall of the hammer' - the seller's acceptance of the final bid. You need to determine the amount of the deposit and how and when the money must be paid.

Bidding

When it comes to the day of the auction, the seller will have also placed a reserve price on the property prior to bidding commencing. This is the minimum price that the seller will accept for the purchase price of their home. You, as a buyer, will not be privy to what the reserve price on the property is, but the auctioneer will normally give an indication when the reserve has been reached.

Before bids are called, the auctioneer will read through the auction contract including any special conditions associated with the particular sale such as the deposit amount and the settlement date.

If your bid on the property is successful, you will be required to sign this auction form, which then becomes the legally binding contract for sale.

Consider hiring a buyer's agent

A buyer's agent can take some of the stress out of the auction by providing advice before and on auction day.

Some of the tasks a buyer's agent can carry out for you are:

• Due diligence on the property to prevent any nasty surprises .
• Researching the property value and giving you advice on what you should expect to pay.
• Helping you decide on your purchase price limit.
• Bidding for you on the day.