Buying a Property at Auction
Buying a property can be an intimidating process, especially at an auction. You are competing with other buyers and there is no cooling-off period.
Many properties are sold at auction, particularly in a rising market. It is important for buyers to understand the process so they can bid confidently on auction day.
There are many things you need to do before the auction. These steps help protect your interests and ensure you are fully informed about the property you intend to buy.
The information below is general only. You should obtain legal advice relevant to your circumstances.
Contract Review
The most important step is to take the contract of sale to your lawyer well before the auction date.
Your lawyer will review the contract and explain the key provisions. They will also identify terms that may need to be negotiated, such as settlement periods, deposit amounts, or additional conditions.
If you are the successful bidder, you can sign the contract with confidence after it has been reviewed.
Inspect the Property
You should obtain pest and building inspection reports before the auction. If the property is in a strata complex, you should also obtain strata reports.
You should inspect the property thoroughly before auction day. Make sure all inclusions are in working order. Check that gas, water, and electricity services are functioning properly.
If you are successful at auction, you will be buying the property “as is”.
Research the Area
You should research the area and surrounding suburbs before auction day. This will help you understand market value and set a realistic budget.
Good research helps you decide how much you are willing to pay. It also allows you to bid with confidence.
Finance
Make sure your finance is in place before the auction. If you are borrowing, confirm your borrowing capacity with your lender.
You should also confirm any lender requirements for unconditional loan approval. Ensure you have sufficient funds available to complete the purchase within the contract timeframe.
Deposit
If you are the successful bidder, you must pay a deposit immediately after signing the contract.
The deposit is usually 10% of the purchase price. Payment can be made by EFT, cheque, or deposit bond.
Register to Bid
To bid at an auction, buyers must register with the selling agent and receive a bidder’s number.
You can register before the auction or on the day of the auction. This can be done when inspecting the property or at the auction itself.
To register, you must provide identification. This must be issued by a government body or financial institution and show your name and address.
Examples include:
- Driver’s licence or learner’s permit
- Vehicle registration papers
- Council rates notice
If you do not have one document, you may use two documents that together confirm your name and address.
Reserve Price
Before auctioning a property, the seller will set a reserve price. This is usually not disclosed.
If bidding reaches or exceeds the reserve price, the property is sold at the fall of the hammer.
Bidding Strategy
You should have a clear bidding strategy before the auction. Set a maximum price and stick to it.
If you feel too emotionally attached, you can arrange for someone to bid on your behalf. You must provide written authority to the agent for this arrangement.
Successful Bidder
If you are the highest bidder, you will be required to act immediately after the auction.
- Provide your lawyer’s contact details to the agent
- Sign the contract of sale
- Pay the deposit
You will enter into an unconditional and legally binding contract. There is no cooling-off period.
The signed contract will be sent to your lawyer. They will then contact you to discuss the next steps.
Conclusion
Being prepared before auction day is essential. Proper advice and planning help ensure a smoother property purchase process.
Buying at auction should not be overly stressful. Our expert team can guide you through the process and help protect your interests.
This is general information only. You should obtain legal advice relevant to your circumstances.
If you or someone you know wants more information or needs help or advice, please contact us on 07 5576 9999 or email
[email protected].
