It is essential to understand the advantages of purchasing your home through the Harcourts Auction platform.
- Being confident that the actual market price for the property will become clear.
- You will know who your competition is on the day of the auction.
- All buyers have a fair opportunity to buy.
- Negotiations are open for all to see.
- You know you are dealing with sellers who want to sell on the day of the auction.
- At the fall of the hammer, the auction is final, and your successful bid means the property is yours with no further negotiations, and the contract is signed immediately after that.
Buying at Auction – Preparation
Once you have identified an auction property that you’re interested in, it’s important to have your finances organized by the auction date. This is also a good time to get all of your other affairs sorted, such as finalizing the sale of your existing property, organizing a property check and familiarizing yourself with all the auction documents.
If you’ve never attended an auction before it’s a good idea to have a look at a few before attending the auction of the property you intend to purchase. This will help you to become more familiar with the auction process.
Inspect the property as many times as necessary and, if you have any doubts, arrange for a builder, plumber, electrician or any other tradesperson to accompany you.
Also, check the auction documents. Make sure you’re familiar with and understand all the details and conditions of sale (the deposit, possession date, balance of payment, list of chattels, etc). You don’t want any unexpected surprises come auction day.
Sorting out your finances
If you plan to buy at auction, it’s important to have your finances sorted out well before auction day to avoid disappointment. Buying a home through auction is a little different to buying a home through other methods of sale in that sales by auction are unconditional.
So it’s vital to have finance confirmed before you bid. Make sure you have a clear budget in mind for the property, and ensure you stick to it. If you are the successful bidder on auction day, the only thing left to do will be to sign the contract of sale.
At auction, you will need to have up to 3% of the purchase price ready to go at the fall of the hammer.
Doing your research
Once you have your finances in place, you’ve worked out your borrowing capacity, and sought pre-approval on your home loan, it’s now time to get to know the market.
If you have identified the property you intend to bid on, have a look at recent sales in the neighborhood. A great place to start is online. There are lots of property comparison sites on the web which will give you an indication of the average sale price of houses, land and units in an area.
Inspecting properties
Take advantage of an open house and review all seller provided reports, disclosures and inspections. There won’t be an inspection after the auction, so if you want your own inspections, engage the services of professionals to inspect the building’s structure and for pests before auction day.
On Auction day
Auction day will be your last opportunity to ask questions before the bidding begins.
Most auctions are held subject to a reserve price
– the price below which a property may not be sold. When this level has been reached, the auctioneer will then announce that the property is for sale.
Be aware that any bid you make over the reserve price could be the one that buys the property.
Passed in is the term used when a property fails to reach the reserve price and negotiations between the highest bidder and the owner do not result in a sale.
After being passed in, the property will now be open to the market, and everyone will have equal opportunity to submit their offer.
If you’re successful on the day you’ll be asked to sign the sales agreement and pay the deposit. This is normally 3% of the purchase price. You should be aware that there is no cooling off period on the purchase of a property at auction, as there is through other methods of sale. This is why it is important to do your due diligence on the property before auction day.