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What Not To Do On Auction Day - Renovators Delight

Finding the Right Project We went to an auction in September for a property in Baulkham Hills, Sydney.
After doing all of the due diligence and deciding this was a property that was worth further inspections - we decided to dig a little deeper.
This house ended up being mortgagee repossession and the bank had taken ownership of the property, it was going to auction and the agent was not really very responsive to any lines of questioning about what had occurred with the property, it was the usual line of "I haven't been told anything, I'm just here to sell it".
The house looked okay on the outside but when you stepped inside it was something else.
Let me explain that a little further...
firstly, before entering this property we needed to sign a waiver to negate any responsibility of the real estate if an accident occurred - I was immediately wondering what I should be expecting! It turns out this property was barely standing, it had windows missing, the plumbing and electrical connections were neglected, tons of dodgy patch jobs, the ceiling was half missing, there was no bathroom and the roof was sagging.
It was what I would fondly call a disaster zone; but I was extremely excited about the possibilities if everything stacked up.
Lifting the Covers - Inspecting the Project The real estate called it a three-bedroom home, however only two bedrooms were in the main house.
We went to this property on three separate occasions to get all of the information we needed and to make sure we hadn't missed anything.
After having a builder and plumber come out to ensure it was structurally sound and my pricing estimate was accurate, we decided this was one we would bid for at auction.
We did attempt to put in an offer before the auction however the banks solicitor was not willing to play ball.
Our plans for the property included gutting the entire property and making it into a four-bedroom residence to increase our selling price.
We concluded we would need $100-$120K to complete the entire renovation.
So, working backwards, we decided the maximum we wanted to pay was $560-580K.
If we got it for that price there would be some great profit available once it was finished...
after all, the house was practically a demolition for most buyers.
Auction Day! So, off we went to the auction! There were about 25 registered bidders, 7 of which actually placed bids on the day.
We started the bidding at $320K, it went up in $20K intervals initially and slowed down after a few bids.
Our last bid was $480K before the bidding took off aggressively.
There were two main bidders, both men, one in his mid 40's, the other in his mid 30's, both seemed to be running very high on emotions.
It was like watching a Ping-Pong match; before one had finished their bid the other was already in reply! This to me was a sign of what to expect at auctions moving forward.
The bidding eventually slowed around at the $660K mark and finally ceased at $695K! After the Dust Had Settled In my opinion, this property should have sold for land value, but ended up going for about $100K over that figure.
Once the hype had died down we went up and asked the new owner what they were going to do with the property and to our astonishment he said he was going to knock it down and re-build.
I will never understand what motivates someone to pay so much more than what a property is actually worth.
My guess is they got carried away with emotions at auction and needed to win or they see some value in the property that I am not seeing - we all have our own motivation for making purchases and as long as you stay true to that then you should be happy! Lets hope this auction madness provides happy stories for both sellers and buyers moving forward!

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