In 2013 the housing market of Australia experienced its strongest performance ever within a four year period. It was in Sydney where the housing prices were at its highest compared to thatof last year with a 14.3% increase to reach the median house price of AU$633,200. This hasbeen caused by a rising demand from a rapidly growing population that is not being satisfied bythe existing supply.
This reality has led to a situation where bidding for houses has reached a critical stage to suchan extent that it is now considered a war, the bidding war. The competition for houses has become so stiff that first-time home buyers are being eased out of the market by more savvy and well-heeled property investors. As a first-time home buyer, it is therefore understandable why you feel jittery venturing into the property market. An auction with multiple bidders or offers can be such a nerve-racking experience and also has a tendency to drive up the price of a house. Knowing some clever techniques in the art of bidding will help you beat the pros and win the bidding war for your dream house, at a reasonable price at that.
Be a boy scout, be prepared
You dont go to war without ammunition, so when you go to a bidding war bring all your ammunition. Come to the auction with a letter for a pre-approval of a mortgage or loan. Even before you go looking for a house to buy, get all the financial aspect of buying a house completed. Find a lender, comply with all the requirements of the lender, including ensuring that you have a good credit rating. Dont be like other buyers who only work on their financial at the same time that they look for a house to buy. What a seller wants to see is some proof that your offer is legit and that the deal wont miscarry. It will help a great deal if you can communicate to the agent of the seller that the sale will be smooth and without any problems.
Have your money ready
In the first three months of 2014, 43% of home sales are cash sales. If you have the cash, then pay in cash. Paying upfront is the best offer you can make. There wont be any fears that the sale will fall through since immediately you can pay for it, nor would there be any worry about loan or mortgage falling flat. But if your savings wont be enough to pay the full price, at least have enough for the 20% required as down payment.
Make your best offer directly
Before even going to the auction, make sure that you have made a research on the prevailing selling price of similar houses in the area where your dream house is located. At the very first instance, proffer your best offer, which should be based on your research. Avoid lowball offers, you may not have the opportunity of a second offer.
Limit contingencies in your offer
Some sellers look at contingencies as stumbling blocks for the success of the transaction. Limit contingencies in your offer to what you feel comfortable with and to those that provide enough protection for you.
A seller may be encouraged to accept not necessarily the highest offer, but an offer that could mean that the sale will advance faster and those with minor hassles.