A GUIDE TO BUYING AT AUCTION
Auction has fast become the preferred method of buying and selling property. To make it as easy and straightforward as possible, here are some simple answers to the most commonly asked questions.
DO I HAVE TO BE IN A CASH POSITION TO BID?
The straight answer is yes!
To bid at auction. You need to be bidding unconditionally. Usually a 10% deposit is required at the conclusion of the auction if you are the successful bidder. If your bid is successful then you have bought the property. There is no subject to finance or subject to the sale of a house, you have bought the property. There is nothing to be wary of if you have done your homework and have sought the correct advice along the way. With each bid you are essentially making a cash unconditional offer.
WHAT IF I HAVE TO SELL MY HOME?
One of the benefits of buying at auction is the fact that you have up to three or even six months, with prior permission from the owners, to settle. The fact that you own a home is not detrimental to your buying at auction. Let me know as soon as possible if this is the case as I just may have someone “waiting” for a home just like yours and an early sale may be closer than you think.
FINANCE; HOW DO I BORROW MONEY WHEN I DON’T KNOW THE PRICE?
Most lending institutions are now conversant with the auction method of sale and once you have worked out how much you are prepared to pay for the property, discuss this with your broker or lending institution and you will find out what they will be prepared to lend you up to a certain “bidding price”. You will then know how high you can bid at the auction. You will need to have this finance approved before the auction and have the funds available to cover the deposit. Let me know if you would like to talk to a friendly broker to help with getting you Pre-Approval in place.
WHAT IF A CAN’T BE THERE MYSELF? CAN I HAVE SOMEONE BID FOR ME?
Yes, however you will need to speak to your sales consultant regarding having an “Authorisation to Bid on Behalf Of” form that you will be required to complete before your nominated person is able to bid. With the permission of the seller and with prior notification you may also bid by telephone.
WHAT HOMEWORK SHOULD I DO?
Before the auction you will need to be satisfied with any and all property information. E.g. Title, LIM and the particular conditions of sale for the property. Your solicitor can approve these for you. You can inspect the property as many times as you wish prior to the auction by making arrangements with the sales consultant or your preferred Harcourts consultant. This is also the time to arrange inspections with any specialist advisors to give you confidence in the property.
WHAT ARE THE PARTICULARS AND CONDITIONS OF SALE?
This is the contract that you will sign if you are the successful bidder on the day and binds you to the purchase of the home. It also binds the seller to sell to you as per the Contract of Auction Terms in the contract. The Particulars and Conditions are available prior to the auction. If you have any doubts on the wording or clauses included, then you should consult the sales consultant concerned and your solicitor. If the terms don’t suit you then it is possible to change some of these e.g. the chattels or payment of the deposit and preference of settlement date. This needs to be done well before the auction by your salesperson who will try to obtain the sellers agreement in writing in the form of a “Variation of Contract”.
CAN I BUY BEFORE AUCTION DAY
Some vendors may consider selling before the actual auction day, some may not. They would normally need to believe that the offer was a very good one to convince them to stop the marketing and sell before the action date. Because the property is marketed as an auction, if a pre-auction offer is received which is deemed to be acceptable to the owners, then all interested parties will be notified. Please consult your sales consultant regarding the” Procedure for Pre-Auction Offers” to fully explain how this process will be handled.
WHAT CAN I DO TO MAKE SURE I DON’T MISS OUT?
Register your interest!
If you are interested in the property, be sure to let the salesperson that showed you through the home know. This ensures that if another buyer makes a pre-auction offer that is at an acceptable level to vendor they will be notified and contact you and any other resisted parties.
WHAT IS A VENDOR BID?
The conditions of sale state that the vendor has the right to bid themselves or through an agent or through the auctioneer. This bid may be used to start the auction by the auctioneer or throughout the auction as deemed necessary by the auctioneer. The auctioneer will clearly identify when they are exercising a vendor bid. It is important to note that Vendor Bids are always below the reserve price.
HOW DO I BID?
As a buyer it is a good idea to have a meeting well before the auction with the salesperson who introduced you to the property to discuss the auction, method of bidding, strategies in bidding and any variations that you may require. If you are unfamiliar with bidding, strategies in bidding and any variations that you may require. If you are unfamiliar ith bidding or would prefer not to bid yourself, do discuss this with your salesperson for other options. Our auctioneers are always available should you require further assistance or advice.