Buying at Auction

How can I buy this home at auction?

Some answers to commonly asked questions about Auctions

What is a real estate auction?
Auction is a way of selling property through intensive advertising media designed to capture the maximum attention of customers within a set time frame. The process is a means of purchasing/selling real estate through public negotiations to
determine the true market value of the property at that time.

What is the reserve price?
The client usually sets the reserve price prior to the auction. The reserve is established as a result of feedback during the marketing period from interested parties. The reserve is the minimum figure that the auctioneer is instructed to sell the property for.

Will the auctioneer be bidding on behalf of the Client?
An auctioneer can make what we call a vendor bid. Often the first bid is a vendor bid if purchasers are reluctant to start an auction. If, during the auction, an auctioneer does make a vendor bid they must declare it to all attendees so that everyone is absolutely clear that they have done so.

How do I bid at the auction?
The auctioneer will ask for an opening bid and will then nominate the increments by which the bidding can be raised. Simply attract the attention of the auctioneer by:

   Raising your hand
   Calling out your bid
   Nodding your head when you catch the auctioneer's eye

If you are the successful bidder, you will be asked to pay the 10 percent deposit and sign the auction contract.

Can I buy before auction day?
Yes, in most cases you can. 

1.  The Auctioneer or Branch Manager must be contacted first and only when the offer is in writing (ie no verbal 
offers).  NO contact with the client should be made regarding the offer. All pre-auction offers must be unconditional.

2.   The offer is to be written up on the Property Brokers "Particulars and Conditions of Sale" with the following clause added as a Special Condition of Sale and initialled by the customer. The customer agrees:

(a)  the offer shall remain open for acceptance by the client; and
(b)  may not be withdrawn or revoked by the customer until 4pm on the second working day after the offer has been first presented to the client.

3.  The offer is communicated to the client/s by the auctioneer for consideration, with a deposit of 10% of the purchase price; this deposit must be attached to the written offer.

4.  If the offer is not at an acceptable level to the client, no counter offer is to be made.  It is merely communicated to the customer that, at that stage, the offer was not at a level that would stop the auction. The deposit is returned un-banked.

5.  If the offer is at an acceptable level to the client, all other registered customers will be contacted and told that an unconditional offer to purchase the property, at a level that is acceptable to the client, has been received.  All other registered customers will then be informed of the time, place and manner for the opportunity to make their best offer (taking into account the holding period for the first offer in clause 2 above).

6.  If other registered customer/s wish to make an offer we will either:

(a) bring the auction forward: or
(b) present the offers as multi-offers in accordance with Property Brokers' "multi-offer" procedures (with the initiating customer having the right to increase their offer).
In the case of 6b, all customers shall be asked to sign a "Multiple Offer Acknowledgement" form, which will accompany the offer.

7.  If the auction is brought forward, the opening bid announced will be the instigating written offer already made, which will be the declared reserve price.

8.  This should all be done within the two working day's time frame, after the offer has been communicated to the client.  It is recommended that time records be kept of the procedure followed and contacts made.

Can I bid when I have to get finance?
Because you must be in a position to bid on a cash unconditional basis at the auction, you should organise through your bank or mortgage broker pre-approval to bid up to a price you are prepared to pay.

Can I bid when I have a property to sell?
There are two options:
If you are in a sound financial position you may arrange bridging finance to cover any delay in settling your property. Or you may ask the client for a longer settlement date, giving you time to sell and settle your property.

What price do I have to pay to buy the property?
This is the price YOU are prepared to pay, and the client will accept, bearing in mind that other customers may have different ideas regarding the value of the property. It is sometimes prudent to fix a figure you would pay to secure the property, but also a higher amount just in case. Remember, if it sells to another customer at auction, you won't have another opportunity.

What if the property doesn't sell?
If the reserve price is not reached, the property is passed in to the highest bidder. The highest bidder is then offered the first right to purchase the property immediately after the auction at the client's reserve price. If a sale is not completed immediately following the auction, the property will be offered for sale to all other interested parties.

What contract do we sign and what are the conditions?
The contract is the auction contract. This contract and other helpful information, is available from the salesperson during the marketing of the property and on auction day. It is important that you read and understand this contract prior to the auction. If you are the successful customer you are required to sign this contract and pay 10 percent of the purchase price as deposit; either by bank cheque or personal cheque. Settlement date is often flexible. You should discuss this with the salesperson prior to the auction commencing.

Legal advice.
Before signing any agreements, both the customer and client should seek legal advice.