How does a FHB purchase from auction?

[Learnings]

Hey guys.

Ive got my eye on a property thats heading to auction in 2weeks.

Ive got a pre-approval from Bankwest.

If I bid and win the auction, do I need to jump in blind and hope the banks valuation comes in ok & theres no further hurdles with finance?

And if the bank says no I am locked into a contract without any finance.

 

[Leikela]

Yes, a pre-approval isn't a guarantee of finance so I'd be careful. I don't like auctions, I've never even considered a property going to auction because of that lack of finance clause. It's never been an issue for me, but I just like that security just in case! I think taking a property to auction instantly discounts a lot of potential buyers, but then again all it takes is 2 buyers to be bidding against each other to bump up the price. Maybe you could make an offer before the auction with a subject to finance clause for say a week (given there's only 2 weeks to go), if you have a bank that can do it that quickly (I had one done in 3 days when they knew the urgency of it). It would have to be a pretty attractive offer though I would think for them to firstly accept an offer before auction and secondly for it to have a condition attached to it. But if it's a slow area, then you never know.

 

[buzzlightyear]

If I bid and win the auction, do I need to jump in blind and hope the banks valuation comes in ok & theres no further hurdles with finance?

Don't worry - valuers will almost always treat an auction result as a transperant process to get to market value & their valuation. Not worth worrying about in the scheme of things.

The more pressing issues are what is your maximum price, staying cool during the bidding process, don't bid for the sake of bidding but whe you bid, do it confidently, and make sure you get a vantage point so you can see everyone.

Good luck at the auction.

 

[Propertunity]

If you want to be on the really safe side, call BankWest and ask for a list of their panel valuers in the area you are buying in. Ring one of them and commission them to do a valuation for you - consider making the figure they come up with as your maximum bid.

 

[Learnings]

All great advice - thanks.

Few points - The vendors "arent accepting offers prior to auction"
And the 32 isnt ready yet.
I was going to submit the 32 to the bank to see if I could get full approval before the auction date, by them valuing it I guess (at my expenese)

Im an avid ebayer so wont be going wild with my bidding, or even bidding until its atleast 'going once'. Most of my ebay sales are won in the final 3 seconds No point bumping the price up, I like finding other peoples limits first.

Place had around 750 dogs living in it, its purrrrfect

 

[Peter_Tersteeg]

The BankWest pre-approval isn't worth the paper it's written on. We provide these to client when they need a pre-approval fast to satisfy someone. These days most pre-approvals are there to give you a fuzzy feeling of safety. They're not actually assessed by anything more than a credit check.

This doesn't mean that you can't buy at auction. You need to understand the likelyhood of an application actually being approved.

If you've got a strong (20% or more) deposit and an income that easily affords the proposed loan, I'd say it's no problem.

If you've got a 5% deposit, I'd say no chance in most cases. If your deposit is 10% and your income is good they you'd probably be okay, but I'd still be nervous.

 

[HappyCamper]

If you've got a strong (20% or more) deposit and an income that easily affords the proposed loan, I'd say it's no problem.

If you've got a 5% deposit, I'd say no chance in most cases. If your deposit is 10% and your income is good they you'd probably be okay, but I'd still be nervous.

Say you do have the 20% and good income, how much risk is there that a backlog of applications might still cause you to miss the settlement date?

 

[Peter_Tersteeg]

The backlog isn't a major issue at the moment. Most lenders seem to have gotten things under control. In most cases finance can be organized in less than a fortnight.