Auctions are a popular method of sale for all kinds of properties. There’s no need to feel daunted, as the transparent negotiating process is great for buyers and often means that the experience isn’t nearly as complicated as you might think.
Taking the time to fully prepare for an auction gives you the best chance to find your dream property. Once you have a thorough understanding of each stage and know what options are available to you, you can enjoy the process and bid with confidence.
There are a few things that you need to understand and have organised pre auction.
For buyers, one of the biggest differences between a private treaty sale and an auction is that there’s no ‘cooling-off’ period. This means that you need to make sure that you’re approved for finance before you make a bid at auction.
Some owners may accept less than a 10% deposit, while others will require more. It’s important to speak to your agent and clearly understand how much the deposit is and the payment options that are available in case you are the successful buyer.
Make sure that you obtain a copy of the contract and thoroughly understand the whole document. It’s a good idea to ask your solicitor to help you with this.
In some cases, you may be able to negotiate the settlement period that’s stated on the draft auction contract. It’s worth discussing the settlement terms that are available with the seller’s agent before the auction.
It’s critical to thoroughly read through all of the available property reports. Some of the key reports to look for are the pest and building reports — but requirements vary between the ACT and NSW, so be sure to ask your agent.
To get a comprehensive understanding of the value of the property, you can research other property sales to get an idea of the property’s likely market value. For a more detailed estimation, you may wish to commission an additional inspection or valuation.
Getting advice from trusted professionals, such as your solicitor and buyer agent, can go a long way to increasing your confidence and auction, as well as your chance of success. An expert can help you to determine if there are any changes to the original draft contract, for example, exclusions or additions to what is listed.
Once you’re feeling thoroughly prepared, have sought the necessary advice and acquired the right documentation and finance approval, you can move onto the exciting part: making an offer.
In some cases, the vendor may be open to considering an offer prior to the auction. The best way to check is to speak to the agent after inspecting the property. Let them know that you’re interested, and ask whether they’re open to offers. They can keep you informed of any opportunities to make an offer before auction day.
It’s important to note that any offer of this nature is made under auction conditions and requires full unconditional finance approval. If such an offer is accepted, it will require an immediate unconditional exchange of contracts prior to the property being taken off the market.
Auction day has arrived, and you have all of your documentation and information ready. Before the action begins, there are a few things you need to make sure you do.
Before you can bid for a property at auction, you need to be registered. All you’ll need is proof of your identity, such as a current driver’s license or passport, as well as an approved form that displays your name and address.
This step is important because you’ll need to clearly display this bidding number every time you make a bid.
It’s a good idea to set an upper limit that’s within your budget and takes into account the property’s market value. Make sure that you also consider what the value is worth to you personally — for example, exceptional views or a highly desirable location — so that you don’t walk away from the auction with any regrets.
To make a bid, you can either announce the amount that you’re bidding or nod to the auctioneer when agreeing to the nominated bidding amount.
If you like, you can have someone bid on your behalf. This person is called your ‘proxy’, and in addition to their own identification, they’ll need a copy of your photo ID and a signed written authority from you. If you’re the successful bidder, the auctioneer may contact you to confirm your winning bid before they sell the property to you.
If you’re not the final bidder, then it’s on to the next auction. If you are the final bidder at the fall of the hammer, there are two scenarios that can occur:
Congratulations, as the highest bidder, you have bought the property! Before you pop the champagne and celebrate, you’ll need to sign the contract and pay the agreed deposit.
Typically, the deposit is paid with a personal or bank cheque — but you should ask the agent what options are available before the auction begins. The deposit must be held by the seller’s real estate agent, conveyancer or legal practitioner in a trust account until the settlement date.
You will have the first right to negotiate under auction conditions. If you do not wish to negotiate, the agent can then speak with other interested buyers. Should these be unsuccessful, the property will usually be placed on the market for private treaty negotiations at a price agreed to by the seller.
Don’t hesitate to get in touch. Our friendly team of professional consultants are happy to provide more information and discuss your unique circumstances.