Buying at Auction

Whilst some buyers have negative thoughts, or even fear, about auctions, there are a lot of benefits in buying at auction. The bidding process is conducted in an open, transparent forum and you know exactly who your opposition are, and what they are doing. In South Australia, a bidder must be registered (having proved identity) and bid by displaying an allocated number – dummy bids are a thing of the past. So, there is no mystery or secrecy – it all unfolds for all to see. With non-auction sales (private treaty) all negotiations are confidential, and if you don’t know who is interested, and what they are offering, you could easily miss out. At auction, you can decide as you go.

The Process

You have seen a property and have decided that want buy it. You will not be able to add any ‘Special Conditions’ to your bid, and you don’t get a ‘cooling off period’, so you will have to get some things sorted out prior to the big day. These include finance approval, arranging a deposit, organising a building inspection and talking to council etc. The property will be at the purchaser’s risk from the day of sale so you will also need to have some insurance arrangement in place – probably by ‘cover note’. Your insurance company or broker wil advise you on that process.

The contract and section 7 statement will be available for you to inspect 3 days prior to, and up to, auction time. These will detail the terms of the sale and all vendor and agent disclosures about any encumbrances, easements and so on. In most cases, the property will be offered with a settlement date of 30 days after auction and the required deposit being 10% of the purchase price. If you require a longer settlement, or a smaller deposit, negotiate before, not after. You can bid with varied terms only if the vendor has approved them.

On the day, you will need to be registered. Bring your driver’s licence or passport because proof of identity will be required. You will fill out the Bidder’s Registration form and be allocated a number. This number will be big enough for the auctioneer to see, and you will bid by holding up that number.

The tactics for bidding is a topic for another blog. But briefly, big strongly, make sure you are very visible and look unstoppable, and be the highest bidder. Don’t hold off from bidding, waiting to hear that it has passed reserve, or for the auctioneer to stop and talk to the owner, because sometimes that doesn’t happen. If the hammer falls, its gone – its too late.

If you are the highest bidder, but the reserve hasn’t been reached, you should be given the first right of negotiation with the vendor in the first instance. This is a great advantage.

If it has passed reserve and you are successful, you will then sign the paperwork, pay the deposit, take out some insurance and then go and celebrate!

If you have any questions about auctions please let me know.

Call Simon on 0419 853 945 or email simon@garyjsmith.com.au

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