Buying your first home can be full of twists and turns. Like the home itself, the process is full of firsts and one of them is bidding on the property at auction. There’s noise, competition, excitement and sometimes disappointment when it doesn’t go your way. But regardless of your experience the preparation that goes into it should be the same, and according to Bayleys National Auction Manager Conor Patton preparation is key.

So what do you need?

“Not to make it sound scary, but you have to have everything lined up.”

The first thing you need sorted is finance, and not just general pre-approval, but approval for the specific property you’re preparing to bid on.

It’s also recommended that potential buyers have all documentation checked over by a solicitor.

“There needs to be particular focus on the LIM report and the title. I do know some first time buyers will work in groups, and there can be lawyers and conveyancers who are willing to look at the documentation for free, provided they do the final conveyancing through them.”

“So there are some tips and tricks that some people can use to try and limit their cost.”

Patton says you also want to make sure that you’ve done your due diligence ahead of the auction, and insurance will continue on the property.

“In different parts of the country, that's really straightforward depending on where you are and who you speak to.”

“Some vendors will provide a building report, and for certain properties buyers are welcome to get their own one too.”

Finance, legal advice, insurance and due diligence are the main building blocks for a buyer to be unconditional so they can bid at an auction.

The key word here is unconditional, because as soon as you throw your hand up to bid, the contract is legally binding.

“Our agents work closely with buyers to help them understand what it means to be an unconditional bidder.”

“I struggle to think of a time that I had an auction where I was talking to a buyer at negotiation time or at an auction where they didn't realise they needed to be unconditional. So a lot of buyers are pretty schooled up on us, but an agent should be coaching them through.”

WHAT CAN I EXPECT ON THE DAY?

Conor Patton says the best thing people can do to prepare for an auction is watch a few others first.

“Definitely go and see one that you’re not going to be bidding at so you can get a sense of the terminology, the pace, and the personnel.”

Once you’ve done that and you’ve made your interest in bidding on a property known to an agent, you can expect to be greeted when you arrive.

“If you wish to meet the auctioneer, sometimes they’ll meet bidders beforehand and answer any questions you may have.”

It’s then good to ask the agent for an update on any interested parties, and whether there are multiple bidders.

“I also really recommend having a bit of a strategy meeting with the agent prior to auction day so that you can talk through a bidding strategy and how things might unfold.”

WHERE DOES IT ALL HAPPEN?

Patton says auctions happen all around the country, and each situation is much the same.

“It's always going to be the same key players in terms of the agent, management team and the auctioneer. These are the consistent people through any auction.”

Auctions can be on-site at the location of the property being sold, or they can be at a more general location like inside a Bayleys auction room.

WHAT CAN CATCH YOU OUT?

It’s important when bidding at auction to keep the agent aware and informed.

“The reason I say that is if there’s any changes, like if something comes out during the marketing campaign that buyers need to be made aware of, or if there was a buyer who made a pre-auction offer and the auction was going to be brought forward.”

“I'm not saying you have to show all of your cards, but let them know you have a level of interest, and they’ll keep you up to speed with any updates.”

Patton says it’s also key to have some kind of strategy.

“Even if it’s not a listing agent, talk to any agent and ask them for advice about how best to bid at auction and what some good strategies are, because it doesn’t always come down to who has the biggest budget on auction day.”

“You see some buyers who end up having a psychological edge over their competitors, because of how they act in the room. Advice can help with that.”

Patton says that in a public forum, you can potentially have an edge simply just by bidding confidently.

“If you just rock up and see what happens, then people can get caught out by not having a proper strategy.”

WHAT ELSE DO I NEED TO KNOW ABOUT FINANCE?

If you’re bidding at auction it’s key to note that because any successful bid is an unconditional purchase, that a deposit is due to be paid immediately.

“There are things called variation agreements or side agreements which buyers can request from vendors. It doesn't alter the nature of the sale, but because the contract calls for a 10% deposit on the day, you can request a variation to that.”

That could include things like a split deposit.

“Some buyers might ask for a 10% deposit paid on a million dollar property to be paid in two parts. So that could mean $50,000 is to be paid at the fall of the hammer immediately, and the balance of that deposit could be paid in a certain number of working days following.”

Patton says that often occurs with first home buyers because there can be some delay in withdrawing Kiwisaver funds.

Variations can also be requested for things like settlement dates, and items included in the chattels.