An Essential Guide to Purchasing Property at an Auction
Purchasing a Property at Auction
Sydney's volatile property market has been the subject of intense media speculation and reporting for a number of years now. From rapid price increases to cooling conditions, COVID predictions and everything in between, the constant news headlines can be confusing and somewhat intimidating.
Regardless of the status of the market, many vendors are now choosing to sell via auction. This can be a daunting prospect for purchasers given the uncertainty surrounding the number of bidders on the day, the conditions of the auction and what the final price might be.
Once the auctioneer says “SOLD”, if you are the highest bidder at an auction you are legally bound to go through with the purchase so it is critical that you are in a position to proceed and don't find yourself caught out. Follow our guide below to ensure you have everything ready for the big day!
Step 1 – Review the Contract
Once you have decided that you are interested in a property, you should request a copy of the Contract for Sale from the Agent for review by a solicitor or experienced conveyancer. The property team here at CDQ can review the contract for you, and if required, seek clarification or amendments prior to the Auction to ensure that there are no onerous terms in the contract and you don't get caught out. We can also act on your behalf and guide you through the rest of the purchase process.
Step 2 – Arrange your finance and deposit
Prior to attending the Auction, you should contact your financial organisation or broker to arrange a pre-approved loan and determine your bidding limit for the auction. It is important to have this clarified before you place a bid for more money than you have access to!
You should also have your 10% deposit organised for the auction, or whatever deposit is required, as this must be paid once the auction is finished. Your bank or lender will be able to provide a cheque for this if required.
Step 3 – Pre-purchase Inspection Reports
It is import to obtain any inspection reports (i.e. Pest Report, Building Report or Strata Inspection Reports) prior to attending the auction to ensure that you are aware of any issues that could affect the value of the property. When purchasing at an auction this is particularly important because there is no "cooling off" period that gives you time to obtain the reports before the final exchange of contracts. CDQ can obtain all of the necessary searches and reports that may be required in advance. If you are happy with the outcome of the reports you can feel confident in bidding for the property.
Step 4 - Signing the Contract
If you are the successful bidder at the auction, the Contract will be completed by the Agent on the spot with your details, our details (as your conveyancer/solicitor), the purchase price and the date. You will then be required to sign the front page. You will also be required to pay your deposit.
Once the Contract is dated, it will be sent to our office so that we can liaise with the necessary parties and organise settlement, which is usually 6 weeks from the date of the Contract, subject to any longer period you have negotiated prior to auction.
If you would like more information on purchasing property at an auction, or if you have found a property that you like, please do not hesitate to contact our experienced property team on ph 02 8566 2400. We can guide you through the purchase and ensure the process runs as smoothly as possible.Back