Buying at Auction
BUYING AT AUCTION IS EASY …
Be fully prepared to bid and buy a property on Auction Day. Remember, the owner of a property will usually sell prior to an auction if a satisfactory offer is presented. Register your interest now should you wish to be informed if an offer is to be presented on the property.
Inspect the property as often as you like
There are usually a minimum of 2-3 open homes per week at set times and you can arrange to come back by appointment if necessary.
Get to know the market price
A property sold by auction is relying on the market forces to determine and set the market price. By assessing what was sold and is currently listed in the neighbourhood recently, you will gain a feel for price. Ask your sales consultant what has sold recently that could be relevant and comparable.
A sale by auction is an unconditional sale (cash sale) so it is vital that you have finance confirmed before you bid. You can speak to a recommended mortgage broker at no cost or obligation to you. They will arrange a time to meet either at your home or office at your convenience and give advice.
Inform your solicitor before the auction
It is recommended that you have your solicitor check the terms and conditions of the sale (the Sale & Purchase Contract) prior to auction. Ask your sales representative for terms and conditions and also a copy of the Certificate of Title. This will show the legal description, freehold or leasehold land and the section size. This is the information your solicitor requires to approve the title to ensure there are no outstanding requisitions.
Check the auction documents
The contract will show that a 10% deposit is payable at the fall of the hammer and the balance is payable upon the settlement date. What is the settlement date? If this is not shown, ask your consultant. It is recommended that you discuss your ideal settlement with your sales consultant. This could possibly be arranged for you prior to auction, with the owner’s approval, and if you happen to be the successful bidder on the day, your settlement date has already been agreed upon.
Before the Bidding Begins
Don’t stand at the back where the Auctioneer can’t see you. The bidding might happen quickly and the property could sell before your eyes. Be sure to identify yourself to your agent. You might feel comfortable to have a family member, friend or sales representative call your bid for you. Remember, if you don’t bid, you don’t buy.
The Auction Commences
The Auctioneer usually begins by reading the terms and conditions of sale, then talks about the home and invites an opening bid. If nobody bids, the Auctioneer will recommend a starting or opening price.
The Reserve Price
Purchasers will not know the reserve price. An owner usually sets a reserve price either on the day of the auction or a day prior. Most auctions are held “subject to a reserve price” which means that the owner has nominated a price below which the property may not be sold, even though you have made a bid. Most auctioneers will announce that the reserve price has been reached and the property is now for sale. Once the reserve price is met, the property will be sold to the highest bidder.
Should the property not reach the reserve price, the property may be “passed in”. The highest bidder may be given first right to negotiate immediately after the Auction. If you were not the final bidder, you do not generally have an opportunity to negotiate until the highest bidder has had a second opportunity to raise their bid to purchase.
After the Auction
The successful bidder/purchaser will be asked to sign the Contract of Sale and will be expected to pay a 10% deposit to Harcourts Trust account. The purchaser will receive a copy of the contract and the original copies will be directed immediately to the purchaser’s and owner’s solicitors.
Remember, if you would like your home appraised or placed on the market for sale, talk to us.