Buying at auction

So the property you love is going to auction, what do you do now? Below you will find some of the answers to your questions:

a. Tell the agent that you are interested in the home. The agent is there to help you and should be able to guide you through the process. Also, if the owner is considering offers beforehand, you will want to know and the only person who will know this, is the agent. If the agent doesn’t know you are interested, how can they keep you in the loop and give you every opportunity to purchase the home.

b. Ask for a copy of the Contract for Sale. Your converyancer/solicitor will want to pursue the Contract before you commit to purchasing the home. This must be done before you buy at the auction, as once the hammer comes down to you, you are locked into purchasing under the conditions of the Contract. If your converyancer/solicitor requires any changes they must be agreed to by the seller’s converyancer/solicitor. If the seller’s converyancer/solicitor doesn’t agree to the changes, then the Contract can’t be altered, on the day. Any changes must be submitted to the real estate agent before the auction day. Your converyancer/solicitor will also provide guidance regarding your required deposit, discuss settlement timeframe and finance arrangements. If you don’t have a solicitor Oneagency can refer one – we don’t get paid for this, we refer them because we know they have been helpful to clients in the past.

c. Consider having a pest and building inspection completed. If the property is strata titled you may like to consider a strata report.You can arrange your own or the seller may have already organised one and it could be available to purchase.

d. Get your loan and deposit ready by visiting your lender and finalising any home loan arrangements. A deposit, usually 10% of the purchase price, will need to be paid on completion of the auction, so ensure you have these funds available.The deposit is usually paid in the form of a personal or bank cheque or by deposit bond. Deposits are payable to the Real Estate and held in the trust account until settlement.

e. Confirm the Auction details and make sure you stay in touch with the agent, just in case the auction date changes. Oneagency usually conducts most of their auctions on site and bidder registration normally starts half-an-hour before the auction start time.

f. Requirements for bidding at the auction. In New South Wales you must register to bid at auction.To register, you need to show photo ID with your current address – a driver’s licence is best, but otherwise bring your Passport. If you intend to buy a property in joint names, e.g. husband and wife, only the person who will be physically bidding needs to register. Once you register you will be given a Bidders Card with your registration number on it – you will need to show this each time you place a bid. If you want someone else to bid for you; are bidding on behalf of a company, trust or superannuation fund or if you can’t attend and need to bid by phone, you will need to prearrange this.It is important that you register under the person’s name or entity that is wanting to buy the property.Once registered you should check the final Contract for Sale – the seller has the right to amend the Contract prior to auction. You should check to see if any changes have been made, that may affect you. Prior to the Auction, the Auctioneer will confirm the Terms and Conditions of Auction and the final terms of the Contract for Sale.

g. Set a limit, but not a round number!A lot of properties sell for only a few thousand dollars more than a round number, so consider a limit which is an odd number.If you want to buy for $600,000, ask yourself would you miss it for another $1,000 or $3,000? If not, set your limit at $601,000 or $603,000. The majority of buyers that miss out at auction stop on a round number!

h. Bid and bid well. Don’t strategise too much. Don’t get caught up in worrying about what will happen or how the bidding will unfold. Focus on what you are there to do and that is purchase a property.The best advice we can give, is that if you are there to buy … Bid. The bidder that bids with confidence and without hesitation usually walks away with the keys to their new home. If someone else bids, come straight back with another bid. You have nothing to lose and everything to gain. Show your competition that you want the property at any cost.The Auctioneer has the absolute right to refuse any bid that they deem not in the seller’s best interest.They also have the right to submit one bid, on behalf of the seller during the auction – this is not the reserve price. Last of all, all bids must be genuine. Dummy bidding is illegal in New South Wales.

i. Be the highest bidder. Only one person can be the highest bidder – if you want to be the new owner you need to be it.There are two scenarios possible – the property will sell, or the seller’s price won’t be met and a sale will be negotiated afterwards.The Auctioneer will confirm if a property is selling before the fall of the gavel.Before the auction, the seller sets a ‘reserve’ – this is the lowest price they will accept. If bidding does not reach the reserve, the seller can choose to reduce their reserve and sell, or pass the property in. If the reserve is not met, you may be approached by the agent and asked to increase your bid. You are not bidding against yourself, you are simply not at a level that the seller will accept and are being given the opportunity to increase your bid and buy.If the reserve is not met, and no further bids are received the Auctioneer may ‘pass the property in’. Whilst this is not a right of law, in most cases the highest bidder, will have the first opportunity to negotiate further with the seller.If you want the chance to negotiate make sure you are the highest bidder.

j. Get ready for the fall of the gavel. On the fall of the gavel the property is sold. It’s done. There is no opportunity after this to further negotiate the price or terms of the Contract. The seller and buyer sign the Contract of Sale (adjusting for any confirmed amendments) and the payment of the deposit is made by the buyer. You need to bring to the Auction your deposit or cheque book; the name, firm, address, email and phone number of your solicitor; and details of any changes to the Contract that have been agreed too between the sellers conveyancer/solicitor and your conveyancer/solicitor. After the Contracts have been signed and dated we will forward the original Contracts for Sale, to both conveyancer/solicitor’s and provide you with written confirmation of your purchase.

k. Celebrate your purchase. Once the Auction is over, your solicitor will attend to the next steps and will liaise with you to make sure your finance is all arranged. They will take you through the process of finalising the sale, paying stamp duty etc. During the settlement period you may wish to see the property again or may need to have a valuation completed. Oneagency can arrange access. If you’re buying the property as an investment, now is a good time to speak with an agent about managing your property. Shortly before settlement you will need to talk to us, to arrange your pre-settlement inspection and confirm the handover of keys.

If you have any more questions we’d love to help – call me on 0426264771.

Good luck bidding!

 

Disclaimer

This information has been provided as an indicative guide only and you should make sure that you seek independent legal advice, so that you have a thorough understanding of your legal obligations before proceeding to auction on a property.