complete noob, FHB, help please

Hi all,

I am a FHB and am looking at bidding at an auction later this month for a 3 bedroom unit.

the property will probably go for around 400-420K, unless we have a crazy buyer there. we have 70K saved as a deposit, so looking for a loan around around 350K. have a meeting with mortgage broker this weekend. With an income of 110K pa before tax, between me and my wife, i don't think the pre-approval will be a problem. what do u think ?
Will be taking the brokers quote to the 4 big four if we can get some more value.

I am not really sure of the auction process and wondering what things I need to look out for.

We have got a copy of the contract already, but its large and I got lost reading it so i am going to get a conveyancer to go over it next week.

my questions are.
what about building inspection / pest inspection report ? when do we do / get these ?

do we need a bank valuation done on the property before hand, even if we have a pre-approval ?

also on auction day, they want a 10% deposit. Do I need to have a bank cheque for it? I am assuming that this cheque will come out of the 70K saving that I have.

these just the things that are coming to my mind now. very nervous as it out first home. I hate the idea of an auction, but we like this property and its convenient for us, so we are atleast going to have a go.

any help on my questions and advise to quell my anxiety would be great :)
 
Hi lancer24,

Exciting & daunting going to an auction!

Can you put in an offer beforehand?

I think bank does val for you.

Perhaps you could use the bank's money for the deposit, that way your 70k could sit in your offset for you to use...better to use OPM :) Yeah, you need a cheque on the day. You could also try & negotiate a lower amount for the deposit eg 5%, once again, keeping more money in your pocket.

I think you can make contract conditional upon ok pest/building report too.

Hope this helps a lil bit :)

Regards,
M&M

I think nervous is good b/c you'll be pushing your boundaries of comfort & this is a good way to grow & learn.
 
Will be taking the brokers quote to the 4 big four if we can get some more value.
Probably NOT a good idea until you actually win at the auction. Otherwise you may get too many credit enquiries on your credit file - this can be a bad thing when applying for credit in future.

I am not really sure of the auction process and wondering what things I need to look out for.
Oh dear :confused:

We have got a copy of the contract already, but its large and I got lost reading it so i am going to get a conveyancer to go over it next week.
Good :)

what about building inspection / pest inspection report ? when do we do / get these ?
Forget that for a unit. You need a strata search done. Ask your conveyancer to arrange.

do we need a bank valuation done on the property before hand, even if we have a pre-approval ?
No - waste of time (and money)

also on auction day, they want a 10% deposit. Do I need to have a bank cheque for it? I am assuming that this cheque will come out of the 70K saving that I have.
Just write a personal cheque.
 
In a word - No. Auctions are unconditional. You can tinker around the edges with deposits being 5% instead of 10% and settlement being 60 days instead of 42 or 35 but that's about it.

That's what I thought.

Lancer, there are a lot of things you don't know about the process. My suggestion would be to avoid auctions.
 
So out of all the replies so far, the person with the least postings has given the most sensible advice, Lancer24 was looking for constructive advice not sarcasm.

"I am not really sure of the auction process and wondering what things I need to look out for.
Oh dear :confused:"

Don't forget everyone has to start somewhere, I'm quite sure there are still things to learn even after years of investing.
 
So out of all the replies so far, the person with the least postings has given the most sensible advice, Lancer24 was looking for constructive advice not sarcasm.

"I am not really sure of the auction process and wondering what things I need to look out for.
Oh dear :confused:"

Don't forget everyone has to start somewhere, I'm quite sure there are still things to learn even after years of investing.

Are you his mum???

I think you can make contract conditional upon ok pest/building report too.

Nope!!! Not at auction.
 
So out of all the replies so far, the person with the least postings has given the most sensible advice, Lancer24 was looking for constructive advice not sarcasm.

What, telling a newbie 'yes, I think you can add conditions to a contract at auction' is considered constructive or sensible?
 
Nearly 9000 posts and that's the best you can come up with.:confused:

Lancer doesn't know how much he doesn't know. That's a very dangerous situation to be in at an auction when a lot of the usual safeguards (time to think about it, contract conditions) aren't in place. If the auction is later this month, my opinion (I'll let you infer what 9000 posts means) is that Lancer doesn't have enough time to learn what he needs to go to auction safely. Therefore, my suggestion would be to avoid auctions altogether. It's Sydney: auctions aren't the norm.

Personally, I also avoid auctions.
 
From a personal perspective, of the 10 or 11 properties we have bought, I too have never bought at auction.

I figure that if a property sells at auction, there is an element of liquidity in the market - i.e. the property is lilkely to be at best "fair priced".

You are much more likely to be able to negotiate a better deal if the property is passed in.

I know there will be the element of "what if properties always sell and never get passed in"? I suggest that may not be the best time to be buying (could in fact be time to be selling). Wait. Save up. There will come a time for a particular area when suddenly nothing sells. Make your move then, and buy up 2, 3 or more.

Cheers,

The Y-man
 
Last edited:
Lancer doesn't know how much he doesn't know. That's a very dangerous situation to be in at an auction when a lot of the usual safeguards (time to think about it, contract conditions) aren't in place. If the auction is later this month, my opinion (I'll let you infer what 9000 posts means) is that Lancer doesn't have enough time to learn what he needs to go to auction safely. Therefore, my suggestion would be to avoid auctions altogether. It's Sydney: auctions aren't the norm.

Personally, I also avoid auctions.

Or ... maybe get a buyers agent to bid on your behalf ... it may cost a few dollars but you'd have an experienced person helping you through the process.

Alfa
 
Lancer doesn't know how much he doesn't know. That's a very dangerous situation to be in at an auction when a lot of the usual safeguards (time to think about it, contract conditions) aren't in place. If the auction is later this month, my opinion (I'll let you infer what 9000 posts means) is that Lancer doesn't have enough time to learn what he needs to go to auction safely. Therefore, my suggestion would be to avoid auctions altogether. It's Sydney: auctions aren't the norm.

Personally, I also avoid auctions.

Thank you, at least this post helps with an explanation why he/she shouldn't buy at auction at this time.
Although with no knowledge of the auction process I did bid on a house which if I had been willing to pay another $5k I would have owned it (it was passed in), it would still have been cheap for the area for a ppor but just not in my budget , so I do think that you can get a "bargain" at auction. As they say it all depends on the day.
 
Hiya

Welcome

A vak is usually not nec.

I say usually.

there are a few caveats here and some of them are.....is the place a normalish security, does it have more than one dwelling on title, whats the zoning etc

Generally, but not always the price at auction will be reflected in the val.

On to the loan, with that sort of deposit youd have a few options.

Often, borrowers will use a 90 % loan, have it interest only , preferably with an offset account.

Over time, place all ur spare cash into the offset; NOT the loan itself.

If you plan on fixing the loan, u can still have some of it as variable and have an offset account on that, esle there are lenders that will do 100 % offset even on fixed.

ta
rolf
 
thanks

Thanks guys for the advise.

time to think about a few things.

I know i am a newbie, but gotta start somewhere :)

I do have a fixed value for this property above which we won't bid. also i am not the person to be swayed by emotions. being calm and thinking logically is my strength though , not sure how i will cope with an auction. We plan to go anyway, as have to see an auction sometime, if not to buy this one, but the experience will still help.


Lancer doesn't know how much he doesn't know. That's a very dangerous situation to be in at an auction when a lot of the usual safeguards (time to think about it, contract conditions) aren't in place. Therefore, my suggestion would be to avoid auctions altogether. It's Sydney: auctions aren't the norm.

Personally, I also avoid auctions.


Alexlee, what do I need to learn . give me a few pointers so that I can atleast start to educate myself .


Hi lancer24,

Can you put in an offer beforehand?

We have spoken with the agent, and they have given us a run down of the auction process. also seller not interested in an offer beforehand.


Propertunity, thanks for the answers. yes I had checked about making changes to the contract. no can do.
 
For example, the fact that auction contracts usually can't be amended. Other things include the cooling off period. Is this waived for an auction contract? Will you have to sign the s66w certificate? Do you know what this means, and is that acceptable to you?

What is your backup plan if, for whatever reason, you can't get finance? Admittedly in your case this isn't too big a risk assuming your credit is clean, but speak to your mortgage broker first.

Going to the auction would definitely be a good idea. I'd suggest going to auctions for place that you have no interest in, so that you can learn the process without being tempted to buy anything.

What type of loan do you want, with what features? Interest only with offset gives you a lot of flexbility, but do you understand how it can be used?

I'll throw this out there as well. Are you only interested in learning about how to buy this property as a PPOR? Would you also, for example, be interested in buying investment property?

Incidentally, a 3 bed unit is an interesting choice. May I ask why? My own experience is that people who want 3 bedrooms tend to go for houses instead, unless they want inner city, and at 400k I'm guessing it's not.
 
Top