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It's Auction Day - What Now?


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So you've done your homework, you have pre approval for your loan and you know your limits. The auctioneer reads the preliminary legal documentation to the crowd as you try to spot your competitors. The moment is at hand and you are about to enter one of the biggest purchase agreements of your life. You briefly wonder to yourself, how did I get here? Have I done everything I could have? Shouldn't I be nervous?

A feeling of confidence will be yours if you have done the necessary work before buying a property investment. So just what is involved in doing this work? Here are the most important areas that you have to cover before buying.


The value of a property is largely dependent on its land price and is building value. You can research the land price by looking at sales history in the area and doing calculations based on taking the dwelling price away from the overall price paid. Land price can be looked at in terms of dollars per square meter. So when you research, you would be looking at several properties and subtracting their dwelling price then dividing the land price by the land size. You will find that the land price per square meter is approximately the same for all properties in that area. To assist you your local council has rates calculated on valuations and you can enquire with them as to the approximate land price valuation within a particular area.

Next you will want to value the dwelling you are considering. Part of the exercise of purchase involves engaging a building appraisal for bank valuations. The person who can do this is usually a registered builder. Upon request he will make an inspection of the dwelling for structural soundness and is obligated to inform you of any problems that may exist. Even if problems are found, it does not mean you should abandon your intentions to purchase. Many older houses are structurally sound, but may have issues with guttering or roof alignment. Some may need foundations replaced or repaired. Estimates of this work should be obtained and calculated into your intended purchase price. Some investors are excited when problems are found as this means there is lots of potential in renovations.

Always look outside the property at the surrounding neighbourhood. Talk to neighbours and local shopkeepers about local issues. Investigate any future plans to local infrastructure such as roadways, railways and community services. Sometimes this will increased demand for property in the area. Sometimes it may mean a devaluation of the same property.

Remember that it is the price you pay at purchase that has the most potential to give you the returns you are after. Never buy a property with the expectation of making your profit after you sell. Feeling confident at auction means you have done all the necessary work to complete your plans. Feeling nervous means you are unsure of yourself and don't really understand the principles of purchasing an investment property.

So go ahead and put your hand up, safe in the knowledge that you are confident. For more information on learning how to invest in property visit

James McInnes is a professional share market trader and investment entrepreneur, with many years experience trading the Australian Share market. You can visit his site at for further information on trading the Australian Share Market


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