If you are looking to bid and buy a property that is being offered for sale by auction, it’s best to be fully prepared. The Contract of Sale for the property should be available from the selling agent. Buyers should read carefully through the contract, ask questions, and have their solicitor check the contract prior to the auction.
A seller may choose to sell the property prior to auction if a satisfactory offer to purchase is presented. To avoid this disappointment, you should make it clear to the selling agent your interest in the property, so that you can be informed if an offer is being considered, allowing you the opportunity to submit a competitive offer.
Here is some other information to help you purchase by auction:
ARRANGE YOUR FINANCE
A sale by auction is an unconditional sale, so it is vital that you have finance confirmed and know your limits before you bid.
UNCONDITIONAL BY NATURE
Auction is an unconditional sale, which means that there is no “cooling-off” period. If you purchase at auction, there is no provision for you to cancel the agreement. It is binding on both the buyer and seller. A deposit (usually 10% of the purchase price) is payable upon the signing of the contract. Buyers may request a lesser deposit amount, but any such request is subject to the written approval by the seller, prior to the commencement of the auction.
BEFORE AND AT THE AUCTION
Any party who intends to bid must register prior to the commencement of the auction. The auctioneer will not accept bids from any parties that have not registered or do not display a ‘bidder identifier’. Usually your driver’s licence or passport is sufficient identification to register.
Position yourself so the auctioneer can see you clearly. Also, be sure to identify yourself to the selling agent. You might feel more comfortable having a family member or friend submit your bids for you. However, anyone bidding on your behalf must have supplied a written authority to the agent or auctioneer prior to the commencement of the auction.
It’s important that you bid on the property from the outset, rather than employing tactics such as waiting for the auctioneer to announce the property as ‘on the market’; a strategy that has been heavily promoted in some media circles, but one that often ends in disappointment. The auctioneer is not obliged to announce that the property is ‘on the market’ or that the reserve price has been met. We recommend you ensure the auctioneer is aware of your interest as early as possible.
PASSED-IN
In the event that the property fails to reach the seller’s reserve price and is “passed-in”, the highest bidder gains the right to negotiate and buy the property.
If the highest bidder declines this opportunity, it is normal for other interested parties to be offered the opportunity to submit offers.
At Harcourts, we find that many buyers are unnecessarily worried about purchasing by the auction method. You should remember that under auction conditions all buyers are given equal opportunity to buy – plus auction has the benefit of being completely transparent, where all buyers can see each other while bidding. Another great thing about auction is that at the fall of the hammer the auction is final, and if you are successful the property is yours with no further negotiation. The contract is then signed straight away and the terms of settlement as illustrated in the Contract of Sale takes effect.
For more information or if you have any questions about the auction process, speak to one of our highly skilled Sales Consultants on 4628 7444.
