Pre-auction Valuation and Building Inspection?

[EmmPlusPlus]

Hi Everyone

Thanks for your help with my other questions. This is such a great site full of information for a first time property buyer, like myself.

I am looking at a 70's brick and tile unit that I am thinking seriously about buying. However, the auction is soon and the vendor is not taking any offers. Ie it must go to auction.

Is it in my best interest to get a pre-auction valuation and building inspection done? I guess I am worried about the cost vs benefit to me, especially as there is quite a high(ish) chance I won't win the auction. What would you guys do?

Also, how much should I pay for these services?

Thanks

[Dean@Massiveaction]

Some may disagree with me but as it is a 70's brick unit a building inspection is probably not essential. I'd get a builder to have a quick walk through maybe. You shouldn't bid at auction unless you either have the cash or are 100% preapproved so you may have to get a valuation for that.
If you don't need a valuation for finance then some decent homework with some local agents and/or local investors should give you a reasonable idea of what you should be paying.
If you have absolutely no idea what it is worth then don't go near the auction, you'll pay too much. You could get a QVonline valuation which will give you a bit of a guide but in the current market valuations are all a bit weird and hit and miss.

[Davo36]

Auctions are tricky in this respect. They put a lot of buyers off for this very reason.

Do you spend a bunch of money doing due diligence so that you can bid unconditionally? What if the owner wants too much or someone else pays heaps?

There's no easy way around it. Maybe you could go to the auction and see if it fails to sell and then try a conditional offer?

[Green Fish]

All summed up in the last two posts: You have to take a calculated risk.

I have to agree with Dean: A 1970s unit with brick cladding is not going to leak, 95% of the time.

[JohnL]

If its you own home (ie an emotional buy), then it may be worth getting a valuation done so you have your finance pre-approved.

Its not something I would ever do for an investment property where I'm trying to get it under its valuation. Chances of winning the auction are too low to warrant spending any money on due diligence.

Its great if you have enough equity in your own home (or cash) so that you can pay for the investment property up front and then put a loan in place later on (perhaps after some improvement are done). Then you can go to auctions and have some fun. Otherwise I wouldn't waste time; make your offers via agents and private vendors.

John

[mortgage broker]

If the bank wants a valuation then of course you would have to do this before the auction. Agree with Dean, with brick and tile you probably would be ok without a builders report.

But the amounts you spend on these reports is still nominal compared to the risks. Even you spent $5,000 on five different auctions and avoided buying at $10,000 over value you are profiting.

[action]

You can insist that your offer is presented prior to auction, ive brought plenty that way. You could ask a valuer nicely to do an estimate for free and if the purchase is made then go thru with a full valuation. Get a builder friend, @ plumber if you are serious about buying just in case the property is a dog. Great buys can be had at auctions, especially now when there is no competition.
helen

[mortgage broker]

Be careful though some banks (if you are using one) may turn around and say that they are not happy with the property. So do not assume that the bank will take it on just because the valuer says its worth more than your purchase price. Some banks are looking very closely at the security these days in terms of what condition it is in and what it is made of.

[Hound]

Doesn't sound like the sort of property suitable for auction. I'm guessing it's must be well located, or perhaps the vendor needs a quick sale. Another strategy is to wait for it to be passed in at auction, then approach them with a conditional offer.