You find your dream home and the agent advises that this property is going to auction. There are things that you need to do to ensure that you ready to attend the auction and be in a position to bid.
What is an Auction and a Reserve Price?
An auction is a public sale of property to the highest bidder. A reserve price is set by the seller prior to the auction. This reserve price is not made public and provided that the price reached is higher than the reserve, the property will be sold.
Is There a Cooling Off Period at Auction, and Can the Contract Be Changed?
If you are the successful bidder, be prepared to be locked into the contract and bound by the terms of the Contract for Sale of Land. There are no cooling off rights at an auction. No changes can be made to the contract after the auction contracts have been exchanged.
What Should I Do Prior to the Auction?
Prior to the auction, a potential purchaser should do a number of things. This includes:
- Having licensed professionals conduct pest and building reports. This will provide the potential buyer with written reports in relation to the present condition and state of repair, will provide information as to any infestations or dilapidation of the property. It is very much ‘buyer beware’ in relation to purchasing a house.
- Ensuring that a strata report is conducted, if applicable. This report will provide important information in relation to the balances in the Administration and Sinking Funds of the Owners Corporation, provide details of insurance amounts and currency for strata insurance, advise details of current levies for the specific lot you are purchasing, and give you copies of minutes of previous meetings where checks can be made as to what works/expenses/issues are being debated for the whole complex.
- Meeting with your financial adviser and obtaining loan approval for the specific property that you are bidding on. The Bank should arrange valuations and process your application and ultimately provide unconditional loan approval before the auction. You need this to ensure that you have funds for the settlement.
- Being ready to provide a 10% deposit at exchange of contracts. This cheque is payable to the agent at the auction if you are the successful bidder. If you need to seek confirmation that the vendor will accept other forms of deposit such as a five per cent (5%) deposit or provide a 10% deposit bond guarantee, this needs to be done prior to the auction date. Contact your solicitor or licensed conveyancer and they can arrange this on your behalf. If agreed by the vendor, the Auctioneer is advised of this agreed change to the contract.
- Having the terms of the Contract for Sale of Land checked by your solicitor to ensure that the terms are favourable and there are no hidden issues with the completion period, the special conditions, title to the property or the council zoning certificate. Your solicitor can request changes to the contract, if required, prior to the auction date and again if these are agreed the Auctioneer is advised of these agreed changes to the contract.
We wish you good luck if you a purchasing at auction and hope that you are the successful bidder at the auction! If you require any assistance with the conveyancing of a property at auction, contact our friendly and efficient Conveyancing Team. We are able to assist you with checking the contract for you before the auction. If you are using our conveyancing services, don’t forget to let the Agent know that Aubrey Brown will be acting for you in relation to this transaction. The Agent will deliver the contract to us on the following business day.