If you are not used to the Auction process it may seem a little challenging, but there are many advantages to purchasing at Auction. Remember - sales by Auction are unconditional, so it is vital to have finance confirmed before you bid.
A Guide for Auction Buyers - Do your Due Diligence and make the time to get things right
- Inspect the property as many times as necessary and, if your require it, arrange for a builder, plumber, electrician, or any other tradespeople to accompany you. If necessary arrange a formal property check.
- View and be satisfied with the Title for the property and the LIM Report. While a vendor may supply a LIM report as a courtesy, it does not represent any warranty on their part. If any matter concerns you, seek legal advice before bidding or submitting a prior offer.
- Arrange finance approval on this particular property with your mortgage lender and arrange how you will pay a 10% deposit on auction day, should you be the successful bidder. If necessary investigate the cost of bridging finance (if you have a house to sell) just so you know what to expect should you own two homes for a period of time.
- Register your interest with the salesperson so that you will be advised of any prior offers.
- Have your solicitor check and approve the Title, LIM, Particulars and Conditions of Sale by auction document and Insurance information.
- Contact the owners Insurance Company to ask if they will insure you, should you be the successful bidder at Auction. When you contact the insurer, quote the Policy Number. You may need to send them the information in this pack.
- Make a decision to buy prior to, or on the day. You can submit an offer for consideration prior to auction. All pre-auction offers must be cash unconditional.
- If you require a different settlement date from that which is noted on the front page of the Auction Agreement (Particulars and Conditions of Sale) or any other variations to chattels or deposit, this request needs to be put on an Aside Agreement form and presented to the Vendors for approval and signing prior to the Auction. Discuss this with me as soon as practicable.
- Arrange an auction meeting with your agent prior to the auction to discuss bidding strategies to
ensure that you are well equipped to make good decisions on auction day and ask any final questions.
- Decide who will bid for you if you don’t wish to bid yourself.
- Bid confidently on the day. While you will have a figure in mind you wish to pay, the nature of Auctions means it often pays to have a little in reserve in case someone else wishes to pay the same as you do.
- If the property is passed in, you and your consultant can enter into negotiations.
On the day
- Remember - this is your last opportunity to ask questions before the bidding begins.
- The auctioneer will begin by reading the terms and conditions, then talk generally about the property.
- Most auctions are held ‘subject to a reserve price’ - the price below which a property may not be sold. When the property is about to be sold, the auctioneer will announce that the property is going to sell.
- Making a bid simply involves making any gesture to attract the attention of the auctioneer. Be aware that any bid you do make over the reserve price could be the one that buys the property.
- If you’re successful on the day you are required to sign the sales agreement and pay a deposit. This is normally 10% of the purchase price unless an alternative amount has been agreed to by the vendors prior to the commencement of the auction (this to be in writing and signed by the purchaser/s and the vendor/s).
A successful bid: True market value
Buying at auction avoids the traditional offer/counter-offer negotiation process. If the bid is accepted you’ll have the satisfaction of knowing you have purchased at ‘true market value.’ An auction is an exciting, competitive environment where everything is out in the open. You can see your competitors and keep track of each and every bid.
‘Passed in’ is the term used when a property fails to reach the reserve price. The property will then be put on the open market and conditional buyers may submit an offer.