It may seem difficult, or even daunting, but there are many advantages of purchasing at auction. When the buyer and seller meet, and a conclusive sale eventuates, true market value for that property will have been established. It's a proven system of success.
MAKE THE TIME TO GET THINGS RIGHT
Once you have identified an auction property that you're interested in, you'll know the date by which to arrange finance. You can then sell your existing property, organise a property check and familiarise yourself with all the auction documents. Your solicitor can also inspect the title of the property and investigate all legal matters relating to your prospective purchase.
This time is also when your Harcourts Consultant will help you gain a better insight into the local market - a very important consideration when trying to assess the market value of the property. You should also consider obtaining an independent property valuation as a further guide.
If you've never attended an auction before you should definitely do so before attending the auction of the property you intend to purchase. This will help you become more acquainted with the auction process and it's various features.
Of course the whole process may never get to auction day. Often a property is purchased "by prior agreement". In this instance you can submit an offer to the property owner for their consideration - a key step of identifying your interest in the property.
Let the marketing consultant know if you are interested in a particular property. Then, if another purchaser submits an offer prior to the auction, you'll be contacted and given the opportunity of submitting your own offer.
Inspect the property as many times as necessary and, if you have any doubts, arrange for a builder, plumber, electrician or any other tradesperson to accompany you.
Also check the auction documents. Make sure you're familiar with and understand all the details and conditions of sale (the deposit, possession date, balance of payment, lists of chattels etc). You don't want any unpleasant surprises come auction day.
Arranging finance is important too. Sales by auction are unconditional, so it's vital to have finance confirmed before you bid.
ON AUCTION DAY:
- It's 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 this level has been reached, the auctioneer will then announce that the property is for sale
- 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
- "Passed in" is the term used when a property fails to reach the reserve price. The highest bidder then usually has the first opportunity to negotiate with the seller or their agent.
- If you're successful on the day you'll be asked to sign the sales agreement and pay a deposit. This is normally 10% of the purchase price.
A SUCCESSFUL BID: THE 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.