Banjo Smyth

Once you have found a property that you would like to buy you need to think about how you’re going to go about actually acquiring it.  Depending on how the property is listed you will need to bid at an auction or put a written offer into the real estate agent.

Let’s have a look at some tips on ‘how to buy a house at auction’.

Before you even think about trying to buy a house at auction it is vital that you have witnessed several other auctions take place.  I would recommend dedicating one Saturday to simply go to as many auctions as you can.  Go to www.realestate.com.au and search for upcoming actions around your desired area.  Then plan out your days schedule.  In most areas you should be able to see at least 3-7 in one day.  This shouldn’t be a chore or a hassle, believe me there is nothing more entertaining than an auction (I’m surprised there isn’t a reality TV show about it yet).  It has all the ingredients of great entertainment – suspense, excitement, joy and sadness, be careful because you might actually become addicted to going to them!

In all seriousness it is very important to see how they work because when it comes to your turn you want to at least believe that you know what’s going on.  When I go to an auction I always like to pretend that I’m going to buy the house.  I will give myself a realistic budget and then whilst the auction is going try to imagine when I would make my first bid and see if I couldn’t have won the property.  If you’re good at using your imagination a I would highly recommend using this strategy as it allows you to feel a little nervous and get an idea of how tense you will be when the real thing comes along.  Just make sure you don’t ACTUALLY make a bid – that could be quite embarrassing!

Another thing to study when ‘auction watching’ is to see who ends up winning and how they went about it.  When there is a competitive auction with a number of bidders the winner nearly always leaves their run to the last minute, or they might do something unusual like raise the bid by $5,000 when everyone else is only raising by $1,000.  A good bidder will give the IMPRESSION that they will pay ANYTHING for the property but when the price goes over their budget they will simply walk away.  Bidding at actions is a very stressful job and If you feel like it would stress you out too much then I would recommend finding somebody who has some experience and getting them to bid on your behalf.

The other way you might buy a property is by putting in a written offer.  This has its advantages and disadvantages.  You will generally have more time to think about how much you’re prepared to offer – but this is not always a good thing.  Remember not to fall in love with a place, think about the numbers and settle on a price that you would be very happy to buy the place at.  How high you’re offer is will depend greatly on how many of people are interested in the property.  The real estate agent will always tell you that there are ‘lots’ of interested buyers but it is generally pretty easy to get a realistic idea of how many people you are competing against.  If there is very little interest then you can obviously start low and try to portray the idea that ‘If I was to buy the property at this price I would be happy otherwise it’s not exactly what I’m looking for’.  If there really are other interested buyers then it’s important to think about what you offer.  It needs to be high enough that they will take you serious and will keep you updated as to other offers.  Always remember to keep your bid to a level that you would be delighted to buy the property at.  The last thing you want is to get a call from the Real Estate agent saying congratulations and think to yourself ‘oh dear, did I really want to pay that much for the property’.

In Chapter 1 (The Plan – How, What & Where?) we spoke about how you should buy in an area that is predicted to have high capital growth but is also accessible from your place of residence (if you are planning on doing some minor renovations).  We also learnt that buying an ‘average’ house in that area is vital in order to get accurate valuations and to make it easy to lease.  So now that you know ‘Where & What’ you’re looking for, let’s concentrate on some strategies to make finding your perfect Investment Property easier and Stress Free!

So where is the best place to start?  Where else but the

internet?  The internet has changed our lives in many ways and when it comes to Property investing this is definitely the

case.  It will save you hours and hours of time.  The first thing to do is to sign up to some of the internet Real Estate sites.  Simply search ‘real estate’ and you will find them.  My personal favorite is www.realestate.com.au but there are many others that are very informative.  When searching for properties you can really customize what you’re looking for and if you have followed my instructions from chapters 1& 2 it will take you no time at all to bring up a list of suitable properties.

Lets pretend you have decided that your ‘Perfect Investment Property’ is  –
- Located in St Kilda
- A 2 bedroom unit
- And your mortgage broker has arranged pre approval for a $350,000 loan

You simply enter all of these details in and you will be faced with a list of properties that fit this description.  How easy is that?

So now that you have a great big list of potential properties its time to contact the Real Estate Agents.  What I’m going to say next might cause you to fall of your chair but believe me – if you want to become a successful investor this statement is true

‘I love Real Estate Agents with all my heart because they are my Best Friend’

Ok, well maybe that’s a little bit overboard but if you can become friends (or at least acquaintances) with some Real Estate Agents you will have a massive advantage over the average home buyer.  You will get first access to properties when they come onto the market.  Plus, Agents are paid by commission and therefore it is in their interest to sell properties as quickly as possible.  Therefore they love Professional Investors because they make quick decisions.  Now I can hear you saying “but I’m not a professional investor’.  I promise you that it won’t take too much effort to trick the average agent into believing you are VERY professional.  Firstly why don’t you turn up with a clipboard and excel spreadsheet.  Ask some questions about the asking price and the predicted rent (making some notes as you go of course.)  Play the part of a Professional Investor – who knows you might even end up believing it yourself!