So, you are looking at property to buy and the one you like the most is being sold at Auction. What does that mean to you? What do you need to be prepared for?
It means you really do need to do your research and make sure that you are comfortable with the property because if you are successful at the auction then you have no right to change your mind.
Here are just a few of the things you can have in place prior to the auction:
Make sure your finance is ready, because you cannot buy at auction with any conditions. An auction purchase is unconditional and there is no cooling off period so it is important that you are sure you can borrow what you need in order to be able to settle. Regardless of what you purchase the property for your bank may value it differently. Make sure you have the funds available if this happens, as you may need more than you initially thought. Make sure you have a buffer just in case!
Inspect the property as often as you like. If you want a building inspection, have this carried out in the days prior to the auction and again note anything that you might have to fix or pay for yourself after settlement. You do not have the right to add a special condition for the vendor to fix anything prior to settlement. If there are items that are of concern ensure that your highest bid allows for that expense.
3. Contract, Form 1 and Searches
Read through the paperwork which will be on display at the relative office for 3 days and for 30 minutes at the property prior to the auction. The agent can email that through to you if you wish. It will also be in your best interest to get your conveyancer to check these before the auction as they will be able to check and discuss any issues with the property and can check if the relevant council approvals have been provided for any additions or building works.
4. Keep Everyone Informed
Let the agent know that you are interested so that, if the vendor decides to accept an offer prior to the auction then you can be kept informed. Let your bank and conveyancer know that you are looking to purchase at auction and advise them immediately if you are successful so that the process can get underway immediately.
If you do intend to bid at the auction then you should request any settlement dates if they are different to the standard 30 days and also request approval for the amount of the deposit you are prepared to pay if successful if it is to be less than the 10% required.
5. Auction Day
On the day of auction, you must register as a bidder and be given a number to display when bidding. Make sure you have some photographic ID with you as it will be sighted when you are registering. At this time you should also make sure that the settlement date and amount of deposit that has been agreed upon is noted on the registration.
Some points that were made by an agent was that you should position yourself where you can see the auctioneer and you can be seen. Don’t be coy about bidding. If you are there to buy the property have a decent crack. The more confident you appear the more fear you will strike in your opposition. You should give the impression that there is no upper limit, even though you might be quaking inside.
Be ready to provide a cheque for the deposit. Ask the agent prior to the auction as to what they will accept and how they require the deposit to be paid.
And, after you are successful, make a quick call to your insurance broker to organise a cover note over the property. You are the proud owner of your new home but ownership comes with some responsibilities, and one of them is that it is at your risk from the fall of the hammer.
Good luck on the day!