After many buyers missed out on securing a property purchase before the festive season, it is timely to offer some tips about bidding at auction.
CEO Harcourts Australia, Marcus Williams, says it’s best to be fully prepared when intending to bid and buy on auction day. Contracts of sale are always on display at an auction and are generally available from day one of the campaign. Mr Williams advises that buyers should read through the contract carefully, ask questions and even have a solicitor check them for you, prior to auction day.
A vendor may choose to sell the property prior to auction if a satisfactory offer to purchase is presented. To avoid disappointment in this instance, you should register your interest with the marketing agent early on, so that you can be informed if an offer is presented on the property, allowing you the opportunity to submit an offer in competition.
As part of their commitment to their clients and customers, Harcourts sales consultants are required to ensure that all interested parties have an equal opportunity to purchase any property they are marketing, so it is important that you make the sales consultant aware of your interest.
Mr Williams offers the following tips for bidding at an auction:
Inspect the property as often as you like
There are usually one or two scheduled open homes during each week leading up to the auction day, but you can usually arrange to inspect the property by appointment, if necessary.
Arrange your finance
A sale by auction is an unconditional sale (cash sale), so it is vital that you have finance confirmed and know your limits, before you bid. Harcourts offers a free service through Harcourts Complete. Speak to your Harcourts sales consultant about a no-cost, obligation-free discussion with an accredited and independent mortgage broker.
Unconditional by nature
A property being sold at auction is an unconditional sale. This means there is no cooling off period applicable and the contract of sale is not subject to any buyer’s inspection or finance clauses. If you purchase at auction, there is no provision for you to cancel the agreement. It is binding on both buyer and seller. A deposit (usually 10% of the purchase price) is payable upon the signing of the contract. Buyer’s may request and lesser deposit amount, but any such request is subject to the written approval by the seller, prior to the commencement of the auction.
Before the bidding begins…
Generally, any party who intends to bid must register prior to the commencement of the auction. The auctioneer will not accept bids from any parties that have not registered or do not display a ‘bidder identifier’. Usually your driver’s licence or passport is sufficient identification to register.
Position yourself so the auctioneer can see you clearly. Also, be sure to identify yourself to the sales consultant. You might feel more comfortable having a family member, friend or sales consultant submit your bid(s) for you. However, anyone bidding on your behalf must have supplied a written authority to the agent or auctioneer prior to the commencement of the auction. The auctioneer may ask to see your ‘bidder identifier’ during the bidding process.
It’s important that you bid on the property from the outset, rather than employing tactics such as waiting for the auctioneer to announce the property as ‘on the market’; a strategy that has been heavily promoted in some media circles, but one that often ends in disappointment when parties using strategies get their timing wrong. The auctioneer is not obliged to announce that the property is ‘on the market’ or that the reserve price has been met. We recommend you ensure the auctioneer is aware of your interest as early as possible. This approach will also help you get into the pace of the auction in a controlled manner allowing you to make rational decisions rather than placing yourself under unnecessary pressure when the property is about to be sold.
Remember, if you’re not there to bid, or don’t have an authorised representative to bid on your behalf, you are seriously restricting your opportunity to buy! The property is sold subject to a reserve price and the vendor has the right to one vendor bid on the property. This bid will be clearly announced by the auctioneer.
In the event that the property fails to reach the vendor’s reserve price and is passed in, the highest bidder may be given the ‘right of first refusal’ to buy the property at the vendor’s reserve price. If the highest bidder decides to act on this right, based on a negotiation with the vendor, the property will be sold without referral to any other party. If they decline this opportunity, it is normal for all other interested parties to be offered the opportunity to submit offers. If you’re one of the ‘under-bidders’ it’s recommended that you delay your departure from the auction until you are certain that the property has been sold. Auction conditions will apply to a successfully negotiated sale price up until midnight on the day of the auction.
The settlement date is nominated in the ‘contract of sale’ as a particular number of days from the date of the contract, for example: ‘30 days from date of contract’. This date of settlement is enforceable and if you have concerns about it, you should notify your sales representative well before the auction commences as the seller may be open to alternative settlement date requests.
Tip: if you are considering purchasing a property at auction, attend a few auctions beforehand to become comfortable with the terminology and format, so by the time your desired property comes to auction, you’re ready to bid with confidence.
Auction is a great method to buy and sell and we wish all parties the best of luck in the process. Consult with your Harcourts sales consultant for any clarification or assistance.
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