Buying a property can be an intimidating process, especially at an auction where you are competing with other buyers and there is no cooling-off period. We are here to advise and support you through the process and make it as straightforward as possible.
Many properties are sold at auction, particularly in a rising market, so it is important for buyers to understand the processes involved so they can bid confidently on the auction day.
There are many attendances to due diligence that need to be completed before the auction to ensure that your interests are protected and that you are fully informed about the property you intend to buy. These attendances are outlined below. The information is general in nature only, and you should obtain professional advice relevant to your circumstances.
Contract Review
The most important thing to do is to send Hamer & Hamer Solicitors the contract for sale of land well before the auction date so that we can review the contract and advise you.
We will review the contract thoroughly, advise you of any risks and help to protect your interests by identifying any terms that might need to be negotiated on your behalf or that you wish to have altered, for example, a longer settlement period, reduced deposit and/or additional terms and conditions.
We can also help you to make sure you are buying exactly what you intend to, and that the property is in the condition you expect, by advising you in relation to pre-auction inspections that should be carried out such as building and pest inspections or a strata inspection if the property is a unit.
If you are the successful bidder at the auction, the reviewed contract can be signed with confidence.
Inspect the Property
You should thoroughly inspect the property before the auction day and satisfy yourself that all inclusions are in proper working order and that the gas, water, and electricity are functioning properly.
If you are successful on the auction day you will be buying the property ‘as is’.
Research
Thoroughly research the area and surrounding suburbs before the auction day, so that you are comfortable about the amount you are prepared to pay for the property and can bid confidently.
Finance
Make sure that you have your finance in order. If you are borrowing, you will need to confirm with your lender the maximum amount you can borrow and the lender’s specific requirements for unconditional loan approval. It is important to ensure that you have adequate funds available to complete the purchase within the timeframe stipulated in the contract.
Deposit
If you are the successful bidder, you will be required to pay a deposit (usually 10% of the purchase price) by way of EFT, cheque or deposit bond immediately following the signing of the contract. You should contact the selling agent for information regarding the process for making payment of the deposit.
Register to Bid
To participate or bid at an auction, buyers must register with the selling agent and be given a bidder’s number. You can register with the selling agent at any time prior to the auction, such as when you inspect the property, or on the day itself.
To register you must provide ID, a card or document issued by the government or a financial institution showing your name and address, for example:
- driver’s licence or learner’s permit
- vehicle registration paper
- council rates notice
If you do not have this kind of proof of identity, you can use two documents that together show your name and address.
Reserve price
Before auctioning a property, the seller will nominate a reserve price, which is usually not advertised. If the bidding continues beyond the reserve price, the property is sold at the fall of the hammer.
Bidding
Make sure you have a strategy going into the auction and that you set yourself a maximum purchase price. Stick to that maximum price. If you feel as though you may be too emotionally attached to bid at the auction yourself, then organise with the agent to have someone bid on your behalf. If you elect to do so, you must provide a written signed authority to the agent authorising the person to bid on your behalf.
Successful Bidder
If you are the highest bidder, immediately following the auction, you will be asked by the agent to:
- provide your lawyer’s contact details;
- sign the contract for sale; and
- pay the deposit.
You will be entering into an unconditional and legally binding contract, there is no cooling-off period.
The exchanged contract will then be provided to our office, and we will contact you to advise of the next steps. If you are successful at the auction, you should send us an email or call us to confirm that you were successful at the auction so that we know to expect to receive the exchanged contract.
Conclusion
Getting the right advice and being fully informed and prepared before the auction day is a critical part of ensuring that the purchase of your next (or first) property runs smoothly.
The purchase of a property, at auction or otherwise, should not be too stressful and our expert team can help guide you through the process and make sure your interests are protected.
If you are wishing to receive advice and support from a buyer’s agent to bid at the auction for you and provide you with other useful services to locate and appraise properties, we are able to introduce you to experienced buyers’ agents who have achieved great results for other clients.
If you or someone you know is looking to purchase a property at auction and needs help or advice, please contact us on 02 9949 4022 or email Michelle Gibson by email to [email protected].
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