Buying for the first time at a home auction can be both exhilarating and terrifying, especially if it’s the first property you’ve ever purchased. With the help of a few other professionals, our first home expert Lisa Barton put together her top five things to make sure you’ve got sorted before you start the bidding.
Assemble your winning team early
Engage with your financial adviser and lawyer as early as possible – in fact, before you even start looking. You’ll need a financial adviser, a lawyer, and likely a property inspector too. At Money Empire, we give you a checklist of everything you’ll need so you can make sure you’ve got people on your side to help you do your due diligence and succeed through the property buying process.
Get your deposit sorted
When you win at auction, you buy – so you have to make sure you’ve got your deposit ready to pay on the day. Make sure you’ve allowed yourself some time to get your deposit sorted, particularly if you’re first home buyers. You may be using KiwiSaver for part of your deposit, or have a First Home Grant to apply for. Generally both of those will take 10 working days to be released, so if you want to bid on an auction then get started early.
Make sure all the fine print is in order
Get a property lawyer to look over everything in advance – from your LIM and title report to the draft sale & purchase agreement. This is a vital step in making sure that you’ll be in a good position come auction time.
Do your research to know whether you’ll be able to buy the property up for sale at a home auction
“Lots of people try to discover a property’s CV (Capital Valuation), but a CV often doesn’t have much bearing on the sale price,” says real estate agent Kevin Liu of Barfoot & Thompson.
“Instead, go on homes.co.nz or TradeMe property insights to find out what other houses in the area are worth or, even better, ask the agent for comparable sales around the area. This will give you an idea of how much it could go for so you know whether it’s worth bidding.”
And get a property inspection to make sure you actually want it
When you buy at auction, you’re signing up to buy on the spot unconditionally – so you better have done your homework. “Unless you’ve got a building background, it can be hard to see whether or not a house is in good condition,” says building inspector Grant Tibbits from The Property Inspectors.
“You don’t want to spend a million bucks on a lemon, or find that the banks won’t actually lend you money because a house is uninsurable. A few hundred bucks to get a property inspection and know that the home you’re buying is in good condition is a small trade off compared to what the cost could be otherwise.”
Get approval for the specific house
Whether you’re first home buyers or seasoned property investors, obtaining approval on your mortgage is vital. When you’re a first home buyer in particular, pre-approval isn’t enough. So many things can affect whether your pre-approval turns into real approval – whether the house is in good enough condition, whether your KiwiSaver and/or Homestart grants come through in time, whether the home is considered insurable… So make sure you’re all set by doing the due diligence we’ve outlined above to get approval for the specific property you’re looking at.
Buying at a home auction is becoming more and more common these days, but for first home buyers it can be pretty tricky. When you’re making that first step towards building your empire, we want to make sure you’re all sorted and can successfully bid on the home you want, without getting caught out. Get in touch today to get the process sorted – and make sure you’re ready for auction.