Do I have to be in a cash position to bid?
The straight answer is yes! To bid at an auction, you need to be bidding in cash. 10% only is required on the day of the auction, the balance is due on the possession date.
However, as explained below, you may talk to the auctioneer about extending the possession date, giving you longer to arrange money. Also with an auction you may have a lead-up period of up to four weeks which should also allow you to get into a cash position.
How do I work out the price?
The auction system allows you, the market, to firstly appreciate the house and then determine the price. We find as marketers, that some people literally become experts in a particular price range and they are able to indicate pretty well exactly what a home is worth. They do this by drawing on the experience of the homes they have looked at in that particular price bracket. If you need help with a guide to the price, ask the consultant for guidance. Whilst you will not get the actual figures or in a similar bracket that we believe indicate a reasonable price for the auction home. You may also decide to get a valuation.
What about selling my house?
One of the benefits of buying at auction is that fact that if the home does reach auction, you will have up to three months with prior permission from your vendors, to organise and get your own home sold.
The fact that you own a home is not detrimental to your buying at auction. Talk to your consultant about whether they have somebody "waiting" for a home like yours as an early sale may be closer than you think. It's worth remembering other buyers will be in the same position you are, and if you get a cash offer on your home, you are in an extremely strong position to either buy the auction property before auction or on auction day.
If you believe your home is "saleable" you may also consider talking the auctioneer via your sales consultant about extending the possession date on the auction property, thus giving you extra time to get your home sold.
How do I borrow money when I don't know the price?
Most lending institutions are now conversant with the modern auction techniques and once you have worked out the price you believe the property is worth, when you discuss this with banks or lending institutions, you will find they believe it quite acceptable to agree to lend you money up to a certain "bidding price". You will then know just how high you can bid at auction.
Overall though, the fact that you are borrowing money should not prevent you from bidding or buying at an auction.
Can I have someone else bid for me?
Of course! Anyone may bid for you on auction day. They may, if they are a professional person, require written advice as to how high you wish to go. Other bidders would be your solicitor, perhaps an experienced member of your family or valuer. With the permission of the vendor and with prior notification you may also bid by phone.
What are the normal conditions I would buy under?
10% of the purchase price is required to be paid on the auction day if you are the successful bidder. That is, you need your cheque book and the abililty to have a balance in your account to cover the deposit once it is banked.
When you bid at an auction you are buying unconditionally and for cash, ie. if you bid is successful, you have bought the home. There is no subject to finance, or subject to house sale, you have bought the house. There is nothing to be wary of as long as you have done your homework, and have sought the correct advice along the way. You are essentially making a cash unconditional offer.
Possession is as per the Particulars and Conditions of Sale, and can be up to three months after the auction date, particularly if you have a property to sell. Some owners will consider variations and these are recorded individually on an "Aside Agreement", to allow potential purchasers to be able to bid on the day.
Can I buy before auction day?
Some owners may consider selling before auction day, some may not. They would normally need to believe that the offer was a very good one to convince them to sell prior to auction. Because the property is going to auction, if an acceptable pre-auction bid is tabled all interested parties will be contacted.
Chattels are normally mentioned in the Particulars and Conditions and you look for them and make sure they tie in exactly with that you believe is being left in the home.
GST will also be mentioned in the Particulars and Conditions and you should check that this tallies with what you believe. Note that on residential homes there is normally no GST payable.
What is a vendor bid?
The conditions of sale state that the vendor has the right to bid himself or through an agent or through the auctioneer. This bid may be used to start the auction or by the auctioneer during the auction to increase the bidding. The auctioneer will disclose all vendor bids. If someone else will be bidding for the vendor, other than the auctioneer, that person will be identified before the auction.
Vendor bids WILL NOT be exercised once the reserve has been reached.
What are Particulars and Conditions of Sale?
This is the contract that you will sign if you are the successful bidder on the day. It is simply a contract that spells out the conditions you have bought the home on, and binds you to the purchase of the home. It also binds the seller to sell to you as per the auction bidding.
The Particulars and Conditions are available prior to the auction. If you have any doubts on wording, clauses included, then you should consult the sales consultant concerned, or your Solicitor.
Note that if you buy before an auction or at the auction you will use the normal Particulars and Conditions of Sale agreement. This may also be used immediately after the auction. If the property is 'passed in' and you are then interested in offering on the property the standard Sale and Purchase Agreement designed by the Law Society and Real Estate Institute will probably be used.