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Buying and selling houses by auction is becoming more and more common. The vendor (the fancy legal name for the seller) wants to get the most money possible for their property and, at the moment, auctions are the mode of sale which is best delivering. That’s because with plenty of interest in the property market, buyers or purchasers are competing with each other and often paying above market price for a home. But it’s not all doom and gloom for the purchaser (the fancy legal name for the buyer), because we have seen that if you go into an auction with a plan, and all your ‘ducks in a row’, you have much greater odds of securing that dream property.
Right, now we’re going to assume that you’ve already found your dream house and been told by an agent that it is up for auction shortly. So now comes your chance to find out more about it and check that you still want to buy it.
1. Do your Research: Get a Land Information Memorandum or LIM report, a title search, the Auction Agreement, property valuation and a building inspection done. Any property sold at an auction is sold as ‘unconditional’, which means you can’t add in any of the usual conditions of a sale and purchase agreement (like waiting for finance, a builder’s check or a LIM Report). Once you’ve made the winning bid at auction, it will be yours regardless. So it’s important to do your homework on the property first! If you are happy with the answers you get from your research, then you can move onto the next step.
2. Sort Your Finance: You’ll need to have your mortgage pre-approved before you bid at an auction. As we’ve mentioned above, that’s because your bid is binding and you must go through with the purchase if it is accepted. You’ll need to ensure you have the do$h to afford it.
3. Become an Auction Pro: Go to other auctions to find out what happens. It pays to really understand the auction process before you start bidding at one. Watching what happens at one is a great way of learning, as is chatting beforehand with a real estate agent who can explain the whole process to you.
4. Be in it to Win it: By the time the auction comes around you’ll be confident to make that winning bid. First up, you’ll need to register as an interested party. Then it’s up to you to do the bidding or you can hire a buyer’s agent to do it for you. It’s easy to get carried away in the moment, but remember to stick to your budget. If you are successful, you will need to have at least a 10% deposit ready to hand over to the auctioneer immediately after the auction, with the remainder due upon settlement. If you are not successful and the property is not sold, then you may be privately approached by the agent to discuss another offer.
Disclaimer: The information on this page is general information only and must not be relied on as legal advice. Legal Beagle is not a law firm or a substitute for a law firm. We are unable to provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defences, options, selection of legal documents or strategies.
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