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Around 25 to 30 per cent of homes in Melbourne
are sold at auction compared with around 20 per cent in Sydney,
around 15 per cent in Brisbane and 10 to 15 per cent in Adelaide.
The advantages are that sellers can sell quickly and buyers
can usually save money (it’s most common in Melbourne
and Sydney).
However, it’s absolutely vital to do
your homework before buying at auction, particularly regarding
the market value of properties. Many auction houses quote
a price 10 or 20 per cent below a property’s expected
sale price in order to attract more interest, although in
a sellers’ market many properties sell for much more
than their reserve price. Property auctions are advertised
in local newspapers and may be held on site.
If you aren’t in Australia or are buying in an unfamiliar area, you can engage an estate agent to find a house, bid for it at auction and negotiate the sale. Agents may charge as little as a few hundred dollars to bid at an auction or up to 3 per cent of the price if they conduct a search and secure a property. It isn’t wise to bid yourself unless you know the ropes, as there’s an art to bidding the right amount at the right time (and with the right degree of insouciance)!
It’s necessary to have your finance
in place in advance when buying at auction, as you’re
required to pay the deposit on the spot (usually 10 per cent)
and close within a reasonable period. Cooling-off rights don’t
apply when buying at auction.
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