I Buy Hou$es - Paul Do

[Giddyup]

I have just been reading this book, and read an interesting line that I would like to get peoples opinion on.

In a chapter on preapproval he states "Do not use preapproval to purchase a house at auction" and "never commit to buying a property until until the loan approval is unconditional"

Well, being in Melbourne, most places go to auction. So with the above recommendation, how do you go about buying a property at auction?

AFAIK you have no option but to hope you get unconditional loan approval after you bought the property at auction.

 

[tobe]

You cant.

Its the same boat many first home buyers are in.

People who purchase at austion either
a) have the full cash balance
b) take a risk they will get unconditional approval after the fact and make good with the settlement
c) arent fussed about losing 10% and being sued for the balance.

I reckon Paul Do doesnt buy at auction generally, and the types of properties he is after dont get marketed as auction potential.....

 

[Player]

Don't pay too much

I have just been reading this book, and read an interesting line that I would like to get peoples opinion on.

In a chapter on preapproval he states "Do not use preapproval to purchase a house at auction" and "never commit to buying a property until until the loan approval is unconditional"

Well, being in Melbourne, most places go to auction. So with the above recommendation, how do you go about buying a property at auction?

AFAIK you have no option but to hope you get unconditional loan approval after you bought the property at auction.

Your hedge therefore is to not overpay. If the crowd bids ridiculously on the day, leave your hands in your pockets.

Be an expert in values for the area and streets you wish to buy in. Have suitable comparables and understand the value of the dirt and the dwelling.

This can be challenging if it is a PPOR. If it is an investment you're looking for, don't buy at auction. You will likely be bidding against other prospective home buyers for that price point and competing with their emotion.

Bottom line is don't overpay and have a little buffer to appease the banks in case they change the rules (or LVR) on you at the 11th hour just prior to settlement.

Good luck

 

[gerd]

Well, being in Melbourne, most places go to auction

Time to do serious DD

Most property's do not sell at auction in Melbourne,

Gerd

 

[BayView]

Well, being in Melbourne, most places go to auction. So with the above recommendation, how do you go about buying a property at auction?

Most houses in Melb are sold privately.

Only a handful of suburbs - which the media love to focus on - are auctioncentric.

Stay away from them unless the market is in really bad shape - then it's the time to buy at auction.

 

[Giddyup]

99% of the properties in the areas and price range I have been looking at go to auction. I guess some areas are different.

 

[MJK]

When bidding at auction you have to be confident you will be approved for the finance.
I believe its more comforting to use a mortgage broker you trust. Prior to auction the broker should have asessed your capacity and will have indicated whether or not finance will likley be approved.

MJK

 

[Steve Fitz]

You could also see if the vendor is open to a pre-auction sale or attend to see if the property is passed in and try to negotiate with the vendors including a subject to unconditional finance.

Auctions aren't too popular in Perth though, so i'm probably less familiar with your situation than other SSers.

 

[Giddyup]

Most houses in Melb are sold privately.

Only a handful of suburbs - which the media love to focus on - are auctioncentric.

Stay away from them unless the market is in really bad shape - then it's the time to buy at auction.

Thats right gerd and bayview... time for you to do some DD.

According to REIV last weekend, when there where fewer auctions due to the football grand final, there were 473 auctions. At the same time there were 459 private sales.

Hardly a handful of auctions, and like I said, most places do go to auction. If they sell at auction is another matter.

 

[gerd]

http://www.reiv.com.au/news/details.asp?NewsID=939

In Melbourne, about 30 per cent of residential sales are conducted by auction.

Gerd