Buying at Auction
Auction is a way of selling property through an intensive advertising media designed to capture the maximum attention of buyers within a set time frame. The process is a means of purchasing/selling real estate through public negotiations to determine the true market value of the property at that time.
The Seller usually sets the reserve price prior to the Auction. The reserve is established as a result of feedback during the marketing period from interested parties. The reserve is the minimum figure that the Auctioneer is instructed to sell the property for.
Bidding is easy:
- All interested parties must register and sign the Auction Bidder Registration Form before the Auction starts. (Photo identification must be given at the time of registry)
- As a Bidder you must use the numbered identifier provided by the Auctioneer to make a bid during the Auction.
- Bids will only be accepted by registered Bidders.
- The Auctioneer will ask for an opening bid and will then nominate the increments by which the bidding can be raised.
- Simply attract the attention of the Auctioneer by lifting your numbered identifier.
- If you are the successful bidder, you will be asked to pay the 10 percent deposit and sign the Auction contract immediately.
- If the property is passed in and you are the highest bidder you no longer have the first right to purchase the property at the reserve price. The property will be offered to all under bidders and any/all interested parties/buyers.
- If you are an under-bidder or if you have an interest in purchasing the property on terms and conditions other than those under Auction, please advise one of our sales consultants and do not leave the Auction until you have ascertained whether or not the property has in fact been sold to the highest bidder/buyer.
In some cases you can buy before Auction day:
- Your real estate consultant has to contact the Auctioneer first and only when the offer is in writing (ie no verbal offers). All pre-auction offers must be unconditional.
- The offer is written up with the following clause added as a Special Condition of Sale and initialed by the purchaser. The Purchaser agrees 1. The offer shall remain open for acceptance by the Seller
2. May not be withdrawn or revoked by the purchaser until 4pm on the second working day after the offer has
been first presented to the Seller
- The offer is communicated to the Seller by the Sales Consultant for consideration, with a deposit of 10% of the purchase price. This deposit must be attached to the written offer.
- If the offer is not at an acceptable level to the Seller, no counter offer is to be made. It is merely communicated to the Purchaser that, at that stage, the offer was not at a level that would stop the Auction. The deposit is returned.
- If the offer is at an acceptable level to the Seller, all other interested buyers will be contacted and told that an unconditional offer to purchase the property, at a level that is acceptable to the Seller, has been received. The Auction is brought forward and all other registered buyers will then be informed of the time, place and manner for the opportunity to bid at the Auction.
- The opening bid announced will be the instigating written offer already made, which will be the declared reserve price.
- This should all be done within a two working day time frame, after the offer has been communicated to the Seller.
Because you must be in a position to bid on a cash unconditional basis at the Auction, you should organise through your bank or mortgage broker pre-approval to bid up to the price you are able to pay or lend.
There are two options to bid while you still have a property to sell
- If you are in a sound financial position you may arrange bridging finance to cover any delay in settling your property.
- Ask the Seller for a longer settlement date, giving you time to sell and settle your property.
The price you pay at Auction is the price you are prepared to pay, and the Seller is prepared to accept, bearing in mind that other buyers may have different ideas regarding the value of the property. It is sometimes prudent to fix a figure you would pay to secure the property, but also a higher amount just in case. Remember, if it sells to another buyer at Auction, you won't have another opportunity.
This contract and other helpful information, is available from the sales consultant during the marketing of the property and on Auction day. It is important that you read and understand this contract prior to the Auction. If you are the successful purchaser you are required to sign this contract and pay 10% of the purchase price as deposit; either by bank cheque or personal cheque. Settlement date can be flexible, but it is usually a 30 day settlement. You should discuss this with the sales consultant prior to the Auction commencing.
Legal Advice: Before signing any agreements, both the Buyer and Seller should seek independent legal advice.