We appreciate that buying at auction can be a stressful time for all involved. If you've never been to an auction before or want to know more about how the process works then the following information will be helpful.
Feel confident that we are here to help you bid to own the property of your choice so dont hesitate to talk to us about the process and some suggested strategies for success on the day.
1. Do I have to be in a cash position to bid?
The straight answer is yes! To bid at an auction, you need to be in a cash and unconditional position.
A 10% deposit is required on the day of the auction; the balance is due on the possession date noted in the Particulars and Conditions of Auction.
However, as explained below, we can talk to the seller on your behalf about extending the possession date, giving you longer to arrange finances.
Also, with an auction you may have a leadup period of up to four weeks which might give you enought time to get in to a cashed up position.
2. How do I work out a price?
The auction process allows you, the market, to firstly appreciate the house and then determine the price. We find as marketers, that some people literally become experts in a particular price range and they are able to indicate pretty well exactly what a property is worth. They do this by drawing on the experience of the properties they have looked at in that particular price range. We will asssit with sharing comparable sales in the market and information specific to the property to help you establish fair market value.
3. What about selling my house?
One of the benefits of buying at auction is the fact that if the property does reach auction you may with the prior permission of the vendors, be able to arrange an extended settlement date. This could give you the necessary time to get your own property sold. The fact you own a home is not detrimental to your buying at auction. Talk to your sales consultant about whether they have someone “waiting” for a home like yours as an early sale may be closer than you think. Its worth remembering other buyers could be in a similar position to you, and if you get a cash offer on your home, you are in an extremely strong position to either buy the auction property before auction or on the day of. If you believe your home is “saleable” you may also consider talking to the auctioneer via your sales consultant about extending the possession date on the auction property, thus giving you extra time to get your home sold.
4. How do I borrow money when I don’t know the price?
Most lending institutions are now conversant with the modern day auction and once you work out the price you are prepared to pay, when you discuss this with the lending institutions, you will find they believe it to be quite acceptable to agree to lend you the money up to a certain “bidding price”. You will then know how high you can bid at auction however our advice is to arrange finance for more than you intend to bid – its always good to have some “fighting money” should you need it.
5. Can I have someone else bid for me?
Of course! Anyone can bid for you on auction day.
They may require written advice as to how high you wish them to go up to. Bidders for you could be your lawyer, a real estate sales consultant, family member, friend or valuer. With the prior written permission of the seller you may also bid by telephone.
6. What are the normal conditions I would bid and buy under?
If you intend to be a bidder you should register your interest with us so we can then provide you with the Particulars and Conditions of Auction and discuss important information about the property with you.
You need to have funds ready to pay a deposit of 10% of the purchase price (unless otherwise arranged) if you are the successful bidder.
It is considered if you bid at an Auction that you have bid unconditionally and for cash ie if your bid is successful you have bought the property. There is nothing to be wary of provided you have done your homework and have sought the correct advice along the way.
Possession date is as per the Particulars and Conditions of Auction. Some owners will consider variations to these terms. Any variations are to be requested and recorded on an “Aside Agreement” prior to auction day, to allow potential buyers the opportunity to bid on the day.
Chattels are normally recorded on the Particulars and Conditions of Auction.
GST will be mentioned in the Particulars and Conditions of Auction and you should check to see if this tallies with what you believe. Note that on residential sales there is normally no GST payable as the properties are sold “Including GST if any”.
7. Can the auctioneer take bids on behalf of the seller?
Yes. Under the Particulars and Conditions of Auction the seller specifies a confidential “reserve price” whereby the Auctioneer has the right to take bids on behalf of the seller. These bids will be notified by the auctioneer as “vendor” or “seller” bids or “the bid is with me”. The auctioneer will not take seller bids after the reserve has been met.
8. How do I know when the property will be sold?
Should the property meet the seller’s reserve the auctioneer will notify that “the property is now on the market”. At this point the property will be “knocked down” and sold to the highest bidder.
9. What if the property does not sell on Auction day?
The auctioneer will pass the property in to the highest bidder who has the first right to meet the seller’s expectations (reserve). It is important to gain this first exclusive right (for a limited period) if you are keen on the property. Should this right be waived this occasion will allow any other interested parties including conditional buyers the opportunity to offer – competition can increase.
10. Do I need to Register as a Bidder?
Although registration is not compulsory, due to legal obligations under the new Overseas Investment and Anit Money Laundering Acts, you are required to complete a form prior to bidding and buying. So, before the auction starts you will need to talk to us, or one of our team.
The reason for this is simple; if you make your intentions known to your agent, he/she can be there to assist you during every step of the process, ie making sure you have all of your questions answered and making sure you have everything in place to become a bidder. If your agent doesn’t know you are interested, you may miss the opportunity to buy.
11. How do I bid?
To success on the day you need a strategy. We are here to help you so talk to us about any concerns you may have or help you may need.
Some of our tips to success are as follows: