This year’s auction market is not only busy but also breaking previous records, with new listings in February up 16.6% compared to February 2023.
July 26, 2024
This year’s auction market is not only busy but also breaking previous records, with new listings in February up 16.6% compared to February 2023.
As more businesses decide to join the auction market, understanding the dynamics of buying at auction, and preparing accordingly, is a must when it comes to securing assets in the face of stiff competition.
Entering the auction with a solid plan will likely influence your success, so it’s important to make sure your financial strategy is robust before the auction begins. This checklist may help you understand and plan for the financial aspects essential for successful bidding.
Calculate all possible costs associated with your potential purchase, including the property price, stamp duty, legal fees, renovation needs, and ongoing maintenance. It’s worth remembering that the standard deposit amount is 20%, but having more may increase your likelihood of obtaining finance. A consultation with a financial advisor may help ensure your budget aligns with your business objectives and market conditions.
Explore a variety of financing options such as loans, credit lines, or leveraging existing assets. It’s also a good idea to research any available government incentives that could provide financial relief or advantages in the auction process. For example, under the Home Guarantee Scheme, available incentives include:
Obtain pre-approval for financing to streamline the buying process and demonstrate your readiness and seriousness to sellers.
Factor in the less obvious expenses like strata fees (where applicable) and council rates, which can impact the total cost of ownership.
Assess the impact of the purchase on your business’s cash flow. It’s important to ensure that your operations can sustain the new financial commitments without strain.
Here’s how you can approach your bidding strategy and risk management to help stay within your budget and make well-informed decisions:
Set a Maximum Bid: Determine your spending limit based on thorough budget analysis and market value assessments.
Understand Market Value: Research the asset thoroughly. Analyse recent sales of similar assets and current market conditions to work out the true value and inform your bidding limit.
Plan Bidding Tactics: Decide whether to start strong to ward off competitors or bid cautiously, reacting to the auction’s flow.
Focus and Discipline: Remember, there is no cooling-off period at auction, so staying focused and unemotional will help stop you from making unwise bids.
Risk Assessment: Identify and plan for potential risks like legal issues or unexpected costs. Having backup plans ready is the best way to help mitigate these risks.
Post-Auction Strategy: Know the next steps for whether you win or lose to seamlessly integrate the asset into your business or refine your future strategies.
The 2024 auction season may offer exciting possibilities for growth and expansion. This checklist may help inform your auction preparations.
This information is for general information purposes only. The information contained herein does not constitute financial or professional advice or a recommendation. It has not been prepared with reference to your financial circumstances or business and should not be relied on as such. You should seek your own independent financial, legal and taxation advice as to whether or not this information is appropriate for you.
For personalised service, the very best financial products and exceptional customer service where you really matter, look no further than the professional team at Mainland Finance
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