Harcourts has already changed the auction game globally and continues to do so here in the United States. First and foremost, it is essential to understand the numerous advantages of purchasing your home through the auction platform.
- Being confident that the actual market price for the property will become clear.
- You will know who your competition is on the day of the auction.
- All buyers have a fair opportunity to buy.
- Negotiations are open for all to see.
- You know you are dealing with sellers who want to sell on the day of the auction.
- At the fall of the hammer, the auction is final, and your successful bid means the property is yours with no further negotiations, and the contract is signed immediately after that.
Preparing for Auction
Once you have identified an auction property that you’re interested in, it’s important to have your finances organised by the auction date. This is also a good time to get all of your other affairs sorted, such as finalising the sale of your existing property, organising a property check, and familiarising yourself with all the auction documents.
If you’ve never attended an auction before, it’s a good idea to have a look at a few before attending the auction of the property you intend to purchase. This will help you to become more familiar with the auction process.
Inspect the property as many times as necessary and, if you have any doubts, arrange for a builder, plumber, electrician, or any other tradesperson to accompany you.
Sorting out your finances
If you plan to buy at auction, it’s important to have your finances sorted out well before auction day to avoid disappointment. Buying a home through auction is a little different to buying a home through other methods of sale in that sales by auction are unconditional.
So it’s vital to have finance confirmed before you bid. Make sure you have a clear budget in mind for the property, and ensure you stick to it. If you are the successful bidder on auction day, the only thing left to do will be to sign the contract of sale.
Doing your research
Once you have your finances in place, you’ve worked out your borrowing capacity, and sought pre-approval on your home loan, it’s now time to get to know the market.
Inspecting properties
On Auction day
Auction day will be your last opportunity to ask questions before the bidding begins. You should also have an opportunity to give the home one final inspection.
Most auctions are held subject to a reserve price
– the price below which a property may not be sold. When this level has been reached, the auctioneer will then announce that the property is for sale.
Be aware that any bid you make over the reserve price could be the one that buys the property.
Passed in is the term used when a property fails to reach the reserve price, and negotiations between the highest bidder and the vendor do not result in a sale.
After being passed in, the property will now be open to the market, and everyone will have an equal opportunity to submit their offer.
If you’re successful, on the day you’ll be asked to sign the sales agreement and pay a deposit. This is normally 10% of the purchase price. You should be aware that there is no cooling-off period on the purchase of a property at auction, as there is through other methods of sale. This is why it is important to do your due diligence on the property before auction day.
