Buying property at auction is very different to other property purchases. The bidding process is public and if the hammer falls and you are the highest bidder, you have to sign the contract right there and then and be bound by the terms of the contract. This means you must be sure you are bidding on a property that you can buy. The auction is usually conducted by an estate agent, acting as an auctioneer and is governed by strict rules.
How does an auction work?
To participate or bid at an auction, potential buyers must register with the vendor’s agent and be given a bidder’s number. The auctioneer oversees the bidding process. They take bids from potential buyers and keep track of the current bid price.
Before auctioning a property, the seller will nominate a reserve price, which is usually not advertised. If the bidding continues beyond the reserve price, the property is sold at the fall of the hammer. If you are the successful bidder, you must sign the contract of sale and pay the deposit on the spot (usually around 10 per cent of the purchase price).
What can I do to prepare for an auction?
Before you bid at an auction, consider the following:
- Do I know the market?
- What kind of property am I buying?
- Am I ready to go ahead with the purchase?
- Do I have written finance approval?
- What is my maximum purchase price?
- Have I completed all my inspections?
- Is this a property I really want to buy?
__Contact us for a free contract review __
if you are thinking of purchasing a property at auction.
