In some cases, the thought of having to bid at auction is so overwhelming a prospective purchaser will outsource the task.
Given there is no cooling off period when it comes to buying a property at auction, the stakes are high. The consequences of making the wrong decision can be devastating and have long lasting impacts.
It is fair to say then, that it is important that you know exactly what you are doing. If you are planning to bid for a property at auction here are 5 things you will benefit from knowing about what is needed on auction day, based on years of experience as a Sydney buyers agent and professional auction bidder.
If you plan on buying a property in NSW and that property is listed for sale by auction, you must register to be eligible to bid. Registering to bid can be done in advance of auction day but is usually done on the day just before the start of the auction. During the registration process the selling agent will collect certain details from you and the other bidders and then give you a bidding card or paddle with a bidding number. You must show this number each time you make a bid.
At the same time as you register to bid at auction you must show photo identification that proves who you are. This is to help eliminate dummy bidders and keep the process fair and honest. If you decide to get someone to bid for you then your photo identification and that of the person bidding on your behalf needs to be provided. If you will not be there in person on auction day, you will need to complete an auction bidding authority form and provide a copy of your photo identification to the person bidding on your behalf so that they can register to bid on your behalf.
Deciding how much you will pay for a property is critically important and should be based on two key factors: affordability and market value. Affordability is the amount you are comfortable paying for a property. Where finance is involved what the mortgagor will lend you will play a defining role, in addition to your deposit. Before auction you should also do your homework on what other similar properties are selling for. This will give you the best indication of what the property is likely to sell for on the day and help set your limit.
A minimum deposit amount of 10% of the purchase price is the accepted norm when it comes to purchasing a property at auction. If a lesser amount is required you will need to have it agreed in advance of auction day. The most readily accepted form of deposit, believe it or not, is still bank or personal cheque. Electronic funds transfer seems to be infrequently accepted in NSW, although it does seem to be embraced in some of the other states and territories.
You should have your solicitor review the contract well in advance of the auction. Written confirmation of any contract amendments agreed between yours and the seller’s solicitor should be taken with you to the auction. If you are the successful buyer these need to be attached to the contract so that they become legally binding.
If you are the successful buyer at auction you will be required to sign the contract once proceedings have concluded. If you will not be in attendance and you arrange for someone else to bid on your behalf, the auctioneer can sign the contract for you.
Buying a property is undoubtedly one of the biggest financial decisions you will probably ever make in your lifetime. Having to buy at auction adds a whole other level of complexity to the process. But if you understand what you need to do and when you need to do it, you should be able to put your mind at ease and make the process an exciting and enjoyable one rather than one that is terrifying.
Best of luck bidding.
If you found this article useful perhaps you might also be interested in some of the reasons why a property sells before auction.
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Shelley Horton is the founder of Sydney based exclusive buyers agency Albion Avenue. With a 20 year career honing her skills in every aspect of the property industry Shelley knows what makes a property worth buying and how to get the best deal.
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