Information

Buying at Auction

Can I buy prior to auction? Not always. Usually deceased estates and mortgagee sales are required to go to auction. Outside of that the Vendor may agree to sell prior to auction if the price is right – it doesn’t hurt to ask the agent.

Can I buy at auction subject to the sale of my own house? No. If you are the successful bidder you will be required to pay10% on the day of the auction with the balance at settlement. The Vendor’s Solicitor may agree to extend the settlement date to give you more time but it is best to explore this possibility prior to auction day

Can I use a personal cheque for the 10% deposit? Yes.

Do I have to register at the auction to bid – I don’t want the agent to know I am interested? You are required by law to be formally identified and registered prior to bidding. You will be provided with a bidder’s number which you must show the auctioneer. The auctioneer is not able to accept a bid from you unless they see your bidder’s number. If you really want to remain anonymous you can register a power of attorney and have them bid for you. That way you do not have to disclose the identity of the purchaser to the auctioneer.

What kind of identification do I need to bring to the auction? You need two forms of identification with at least one of them showing your current residential address. Your agent has a list of the approved identification methods. How do I work out the price? Research what similar properties have been selling for in the local market. Make sure the sales are recent as the market has been moving both up and down in the last few years. The agent should be able to direct you to some comparable sales. Property websites such as realestate.com.au also have solid information and Australian Property Monitors have a report called “Home Price Guide” that can also be of assistance. Many agents also have a range of sold properties on their website.

I don’t want to pay too much – how can I work out the owner’s reserve price? You can’t. The agent will give the written reserve to the auctioneer prior to the auction, but they are not at liberty to share that information with you.

How can I be sure that the vendor doesn’t have a dummy in the crowd to run the price up? It is against the law and there are large fines applicable to not only the agent and the auctioneer, but also to anyone caught being a “dummy bidder” as well as the Vendor of the property.

What conditions should I expect to buy under? The standard deposit is 10%. Occasionally a vendor may agree to accept less than that, but it is best to explore this possibility prior to auction. Make sure you check the contract on the day to ensure there have been no special conditions added that you are not aware of. Inclusions and settlement date are highlighted in the contract. Upon the fall of the hammer you are expected to pay the deposit required and you will waive any cooling off rights that may be applicable under private treaty arrangements. Be aware you will be bidding under the standard terms & conditions of auction and they will be displayed at the auction.

What happens if I get carried away at the auction and pay more than I intended? Be very careful! The auctioneer has the ability to sign on your behalf – so even if you change your mind and refuse to sign, the auctioneer can sign for you and you are legally obliged to purchase the property.

 

After Exchange – Now What?

Pretty vacant. Make sure you instruct the solicitor that you require vacant possession when you are buying a home that currently has rental tenants. There have been a number of instances of buyers assuming the tenants will have been given notice, only to turn up and find they have unwittingly inherited boarders.

Very interesting. Remember to instruct your solicitor to make sure the deposit is invested. Don’t just assume that this will happen, because if it is just put into the agent’s trust account, there is no interest payable to anyone.

Atten-shun! Inspection time! Don’t forget to carry out a pre-settlement inspection to make sure you get exactly what you paid for. Most agents can relay instances when people moved in only to find items such as gas fireplaces and TV antennas have been removed, or expensive pool equipment has been replaced with a cheaper version. In nasty divorce situations, a spurned partner may return and take things like light fittings, door knobs and anything

else that can be unscrewed. One agent completed a pre-settlement inspection with their buyer to find a horse had been residing in the suburban backyard for the period between exchange and settlement, and another found the front lawn had been rolled up like turf and taken away. Obviously these are extreme situations and very unusual, however they have happened and are much easier to deal with prior to settlement.

Buying a house costs more than just the purchase price. Remember to budget for pest and building inspections, valuation, application fees, conveyancing costs, stamp duty, transfer fees and council rates. And don’t get caught if you have an existing mortgage to pay out – some loans have penalty clauses in them if you pay out ahead of time, make sure you get clear advice from your bank about all of the costs you should be expecting.

When is it your property? A lot of buyers fail to realise that the property is technically theirs after exchange and as such, they are responsible for the property insurance from that time.

On Time. Most people just assume they will settle on the nominated day and organise removalists and time off accordingly. Don’t assume that this will happen automatically. You must communicate regularly with your solicitor and your lender. I can’t tell you how often lack of communication has caused a last minute delay, and with settlements often set down for Friday afternoons it may see you without a roof over your head for a few days.

Ooh, what’s that? It may be hard to believe, but you even need to check that the sewerage is connected.

 

Remember – when it comes to buying a home,the important lesson is, assume nothing!