Purchasing at auction is an increasingly popular selling technique when buying or selling a property.
This method is much riskier for the buyer than the traditional offer and acceptance method – which enables the buyer to include special conditions that must be met with the sale of the property.
Buying at auction means when the hammer goes down, and the property is sold, the sale is unconditional. A deposit is required immediately; there is no leeway to change your mind or caveats required for the purchase to go through. Therefore, it’s important that you complete due diligence on the property you wish to purchase before auction, including confirming your finance approval, obtaining the LIM report, building report, methamphetamine contamination report and anything else you may need to be certain that the property is right for you.
Once your due diligence is complete and you are ready to attend a property auction, here are the steps you should go through:
● Before the auction date, register your interest with the real estate company.
● Your conveyancer or solicitor should review the auction terms and conditions of the Agreement for Sale and Purchase before the auction.
● Ensure the vendor warranties, which give you protection in some circumstances, have not been deleted from the auction terms.
● Have your deposit amount available. If you win the auction your deposit is immediately payable.
● Research the value of the property before you attend the auction as the reserve price will not be publicly available. Being prepared will ensure you are not overpaying or entering a bidding war and going over your pre-approved finance limit.
● Once you have purchased at auction you are committed to completing it. There is no going back without a legal battle, and you may forfeit the deposit you have paid.
● If the property fails to sell at auction, you may then be invited to enter into negotiations with the vendor to discuss price, the settlement date and any special conditions of sale.
We recommend talking to us before signing any Agreement for Sale and Purchase to ensure your rights as the buyer are protected, and there are no surprises come auction time.