6 tips to prepare for an auction

Below are 6 tips to help you navigate your way through buying real estate at an auction.

1. Research

Prior to attending an auction, you should familiarise yourself with the local property market in which you are bidding as it is helpful to have an idea on what similar properties have sold for in that area. You may also wish to attend other auctions (even if you have no intention of bidding) to familiarise yourself with the process and what happens on the day.

2. Understand the process

It is very important to note that should you be successful at an auction, that the contracts will be unconditional. There is no cooling off period and you are not able to choose to not continue with the purchase should you change your mind. You should therefore undertake all of your due diligence and checks on the property including pest and building reports, strata reports, council searches and contract reviews prior to the auction date.

3. Check the contract

Once you have decided to pursue a particular property at auction, you should request that the contract for sale be provided to you by the real estate agent. Once this is obtained, it is our strong advice that you obtain professional advice on the contract from your solicitor or conveyancer prior to the auction. If there are changes required to the auction, your solicitor or conveyancer needs to organise this prior to you attending to ensure the contract that is exchanged incorporates the terms that you require.

4. Organise the deposit

If you are successful at the auction, you will be required to pay the deposit on the day. The deposit is usually 10% of the purchase price however 5% deposits and deposit bonds can be requested if required. If you will be paying the deposit by electronic transfer, check with your bank as to daily transfer limits to ensure that there are no unexpected issues on the auction date.

5. Review your finances

You should consider the maximum price you are prepared to pay for the property prior to attending the auction. This should also be discussed with your broker/bank to ensure that if you are obtaining finance that you would be eligible to borrow the required amount. Not obtaining finance is not a reason to pull out of the contract, so we recommend that you should have pre-approval in place prior to bidding. Pre-approval is still subject to the bank completing a valuation and their final review but it is the most assurance you can have prior to an auction.

6. Prepare for the day

You will need to register for the auction. You can do this by contacting the agent prior to auction or you may register as you arrive. If you cannot attend the auction yourself, you can authorise someone else to bid at the auction and sign on your behalf which needs to be organised prior. You should also ensure that you take your identification documents such as a driver licence or passport on the day.

Our conveyancing team provide a FREE contract review if a property you are purchasing is going up for auction. Reach out and get in touch with our property team today.

Photo 72398437 / Auction © Oleg Dudko | Dreamstime.com