It may seem difficult, or even daunting, but there are many advantages to buying a house at auction. When the buyer and seller meet, and the hammer comes down, the true market value for that property will have been established. It’s a proven system of success.
Buying at auction avoids the traditional offer/counter offer negotiation process. An auction is an exciting, competitive environment where everything is out in the open. You can see your competitors and keep track of each and every bid. No deals behind closed doors!
Here’s my advice!
Before the Auction:
Once you have identified a property that you are interested in, you’ll know the date by which you need finance. You can sell you existing property, organise a building inspection, check the LIM, and ask your lawyer to check the title, and auction documents.
Ask to see the REINZ Code of Practice for auctions, and ask the agent whether they and the owner will comply with those rules. There should be a signed copy on display.
Ask your sales consultant to give you a better idea of the local market. The consultant should be able to provide you with an overview of the local market, or ask Zoodle! Zoodle has sales statistics and information on every community in New Zealand. Or you should consider obtaining an independent valuation from a Registered Property Valuer as a guide.
If you have never attended an auction before, you should definitely attend one before the auction of the property you are interested in. This will help you get a feel of the auction process and it’s various features.
Sometimes though, a property sale never makes it to auction day. Someone makes the seller an offer they can’t refuse and the auction is “brought forward” or “sold prior”. At Harcourts there is a system to ensure fairness to all.
If you are interested in a property let the sales consultant know. Then, if another purchaser submits an offer that is acceptable to the seller, you will be contacted and given the opportunity to present your own offer. Sometimes an auction will be conducted several days or weeks before the advertised date, and all interested parties are given the opportunity to purchase the property.
Inspect the property as many times as necessary. If you have any doubts, get a builder, plumber, electrician or any specialist to advise you.
Check the auction documents. Make sure you are familiar with all the details and conditions of sale, (the deposit, possession date, balance of payment, list of chattels, etc). You don’t want any unpleasant surprises on auction day.
Arranging finance before auction day is essential. Have a chat with a mortgage broker or with your bank. Don’t forget, an auction sale is unconditional, so it’s vital to have you finance confirmed before you bid.
On Auction Day:
- It’s your last opportunity to ask questions before the bidding begins.
- The auctioneer will begin by reading the terms and conditions of sale and then give a sales pitch about the property.
- Most auctions are held “subject to a reserve price”. This is the price below which a property may not be sold.
- Making a bid involves making any gesture that attract the attention of the auctioneer. If the auctioneer is unsure whether you made a bid he/she will ask you to confirm it. 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. The highest bidder usually has the first opportunity to negotiate with the seller or their agent.
- If you are the successful bidder on the day you will be asked to sign the contract and pay the deposit. the deposit is usually 10% of the purchase price.
If you have any questions about any auction, whether a Harcourts auction or another company’s auction and need assistance of any kind please do not hesitate to contact Tony White on 0800 61 8888.
