AS WE head into the spring season, we can expect to see more properties come on to the market and increased numbers of prospective buyers out looking.
For anyone considering buying at auction, it is important to follow the motto – always be prepared.
Buying at auction is not for everyone. It can be a nerve-racking process for both prospective buyers and sellers alike.
And it requires an understanding of the rules and certain pre-auction preparations and post-auction requirements.
However, if you understand how the auction process flows, it can work in your favour. Going to more than a few auctions first, is one of the best ways to familiarise yourself with the actual process on the day.
Unlike the traditional method of buying residential property, which in Queensland provides a ‘cooling off period’ of five working days after you sign the purchase contract, a cooling-off period does not apply to auction sales.
The terms of a residential auction usually require buyers to bid on an unconditional basis. This means that there will be no special conditions such as a sale being subject to buyer finance or the sale of another property.
And a successful bidder on the day will be required to settle the contract.
If the property is passed in at auction and a buyer and seller negotiate a contract afterwards; then the cooling off period will apply.
Before an auction, here are some key preparation tips:
• Know your market – do your own research and know what the property is worth
• Get the necessary checks done – title, building and pest
• Obtain a property valuation
• Secure your finance
• Set your budget
• Get a copy of the contract and seek legal advice to ensure your understanding of the terms and conditions of the auction
A successful bidder will be required to pay a deposit immediately. This is often 10 per cent of the sales price, but that will be an unknown figure until the auction occurs. A personal cheque is one of the easiest ways to handle this requirement.
On the day, the most important piece of advice for prospective buyers is to leave their emotions at the door.
Prospective buyers should set a maximum price they will bid – and stick to it. Knowing their ‘walk away’ limit means that bidders will have no financial regrets, regardless of the outcome.
Here are some other tips for on the day:
• On arrival, register to bid
• Obtain a copy of the terms and conditions of the auction
• Ascertain whether there have been any changes to any contract you may have previously been provided – check with the auctioneer
• Have a contingency plan in place in the event that the property does not sell at auction and you are able to enter into negotiations to purchase
Once bidding reaches or exceeds the reserve price – i.e. the price that the vendor and agent agree is the minimum selling price – the property is declared officially ‘on the market’.
Up until that point, the reserve price is known only to the seller and the auctioneer.
If bids do not reach the reserve price, then negotiations may be entered into, after the auction, for a sale to take place.
The highest bidder has the first right to negotiate to buy, post-auction.
For more information go to: www.matusik.com.au
Original Article published here