Tips for Bidding
Buying At Auction
The auction system is a very popular method of selling property. All auctioneers and agents are required by law to be licensed under the Property Stock and Business Agents Act. This material is designed to advise prospective buyers at auction on how to go about bidding confidently.
Reserve Price
Unless advertised otherwise, all properties are subject to a reserve price. This is the price that the person selling the property will be prepared to accept. The auctioneer has no authority to sell under the reserve price, and if at auction the reserve price is equalled or exceeded, the property is sold to the highest bidder on the fall of the hammer. When the property is sold under the hammer at auction, the highest bidder is required to sign the Agreement for Sale and pay the deposit on the spot. The process of interested persons bidding for the property should result in a realistic price being set by competitive bidding. The agent cannot disclose the reserve price. To assist you in establishing a price you should ask the agent what similar types of properties are selling for in the area. The lending institution may give an opinion of value, or you may engage a registered valuer to complete a formal valuation.
Agreement for Sale
This is prepared by the seller’s solicitors or licensed conveyancer. If you are seriously interested, you should have your solicitor or conveyancer inspect the Agreement for Sale which will be held by the auctioneer. You should also check that your copy is an exact copy of the auction contract and check that there have been no late changes. Make sure that you have a clear understanding of exactly what is to be included in the sale. All fittings, furniture and other items to be included should be clearly listed in the Agreement for Sale.
Recommendations
To assist you in becoming familiar with basic auction procedures it’s a good idea to attend another auction before the one where you plan to bid. Always make sure you check the scheduled time and place for the auction, and make sure you are on time. When attending the auction do not hesitate to seek advice or information from the auctioneer or other staff.
Bidding at Auction
When the property is knocked down to you as the successful bidder, you are required to sign the Agreement for Sale on the spot and pay a deposit. This is usually ten percent of the purchase price. If you do not have a cheque account, then talk to the agent beforehand to check in what other way the deposit can be paid (eg. bank cheque, building society cheque, deposit guarantee). Should the reserve price not be reached, then the person making the highest bid will normally have the first opportunity to purchase at the reserve price. If the highest bidder does not purchase at the reserve price, then the property will be placed back on the market for sale by private treaty, at which time all interested parties may negotiate with the agent. Bear in mind when attending an auction that your bid may not be successful. You may still, however, incur some costs such as solicitor’s fees, inspection and valuation fees, and possibly fees from your lending body.
Registering at Auction
If you want to bid on a property it is now law that you must be registered.
This is simple, just bring along some personal ID such as a drivers licence, passport, personal ID card etc. Prior to the auction commencing, take your ID to the person who is conducting the registration and he/she will write down your name & address and register you with a number. This number permits you to bid at the auction.
How to bid at Auction
To Attract the Auctioneer’s attention by using a gesture such as raising your hand, calling out or nodding your head when you catch the auctioneer’s eye. Don’t hesitate to indicate your interest when the auction starts and the auctioneer calls for bids. Your bid does not have to be the amount nominated by the auctioneer, although it is at the auctioneer’s discretion as to whether or not to accept a bid. Don’t leave your bidding until the last moment – you may just miss the property. Remember when the hammer falls the highest bidder is the purchaser. Remember your finance limits at all times and do not bid over your limit. Remain calm, and do not enter into a personal bidding contest against another bidder.
