1. Immediate financing
Although the fast process can be an advantage, it also means that you need to get all your finances in order and ensure that you have a 10 per cent deposit on the day if your bid is successful. The balance will then be required within 28 days. You need to pay by this date otherwise you risk losing the property.
2. An unconditional purchase
When you buy a property at auction, it is an unconditional purchase. This basically means that you are buying the property as seen, so if there are any issues with this then it is your responsibility. You cannot get out of the sale if there are any major issues that you did not know about and there is no cooling off period.
3. Overpay the market value
More often than not you will end up overpaying when you buy a property at auction and quoted prices tend to be unrealistic. This is particularly true if the property is in high demand and there are large crowds spurring you on. It can be very easy to go over budget.
4. Restricted to buy property that’s available
Unlike buying property within an off the plan development which is home to multiple properties and has several properties with the same floor plan, buying property at auction limits your choice. You can only buy property that is available for auction and this might not be in the suburb or street that you preferred.
Buying property at auction generally means you have to face a high amount of competition, particularly for properties or suburbs that are in high demand. This can make it harder to successfully purchase the property at your desired price, particularly if other bidders are prepared to pay more than you. In comparison, buying property off the plan within the early stages has greater choice and less competition to go up against.
6. Renovation work required
If your property is an established property then it is likely that renovation work will be required. It’s best to get a builder or someone to inspect the property with you before auction date so you have an idea how much extra this property will cost you.
7. Vendors might not want to sell for the price
Another disadvantage is that the bid might not reach the reserve price so will not be passed in or the vendor might not want to sell the property for the price you offered. This can be frustrating to buyers who thought they purchased the property, only to find that the vendor will not accept it after all.
8. Highly emotional experience
Buying property at auction is an emotional and nerve-racking experience, especially if you do not understand the process. You therefore need to familiarise yourself with auctions and attend some beforehand. However, on auction day, you might not feel comfortable enough to make a bid and end up leaving empty handed.
If the thought of buying a property at auction has left you feeling completely overwhelmed, then there is a simpler way to purchase property without the overinflated price tags whilst you have a greater chance of being successful.
Buying property off the plan is well worth considering and is also becoming increasingly popular. This is because of the following reasons:
Although buying property at auction can be an exciting prospect, it can also be a stressful and nerve-racking experience. Not only do you face higher competition from other buyers in the same boat as you, but the competition can also be fiercer and you might not even have the chance to make a bid.
If you do manage to make a successful bid, then it’s likely that you will overpay for the property instead, whilst you could also face your bid being turned down by the vendor. You might also find that the property will end up costing you a lot more due to major issues you discover later on.
In comparison, buying property off the plan can be a much more smoother process and our Property Consultants are happy to help you understand this purchase method in more detail.
Find out more today about buying off the plan and why you shouldn’t buy property at an auction by contacting iBuyNew today on 1300 123 463.