The straight answer to this question is yes. To bid at an Auction you need to be bidding in cash. 10% only is required on the day of the Auction, balance is due on the possession date. However, as explained below, you may talk to the Auctioneer about extending the possession date and giving you longer to arrange money. Also with an Auction you may have a lead-up period of up to 4 weeks that also should allow you to get into a cash position.
The auction system allows you, the market, to firstly appreciate the house and then determine the price. We as marketers, find that some people become experts in a particular price range and they are able to indicate pretty well exactly what a home is worth. They do this by drawing on the experience of the homes they have looked at in that particular price bracket. If you need help with a guide to the price, ask the consultant for guidance. Whilst you will not get actual figures, a consultant will normally be able to supply you with a list of similar homes that have sold in the area which compare with the Auction home. You may also decide to get a valuation.
One of the benefits of buying at auction is the fact that if the home does reach auction you may have up to three months with prior permission from the vendors, to organise and get your own home sold. The fact that you own a home is not detrimental to your bidding at auction. Talk to your consultant about whether they might have somebody “waiting” for a home like yours as an early sale might be closer than you think. It’s worth remembering other buyers will be in the same position you are, and if you get a cash offer on your home, you are in an extremely strong position to either buy the Auction property before Auction or on the Auction day. If you believe your home is “saleable” you may also consider talking to the Auctioneer via your sales consultant about extending the possession date on the Auction property, thus giving you extra time to get your home sold.
Most lending institutions are now conversant with modern auction techniques and once you have worked out the price you believe the property is worth, as in question 2, when you discuss this with banks or lending institutions, you will find they believe it quite acceptable to agree to lend you up to a certain “bidding price”. You will then know just how high you can bid at the auction. Overall though, the fact that you are borrowing money should not prevent you from bidding or buying at an Auction.
Yes. Anyone may bid for you on the auction day. They may, if they are a professional person, require written advice as to how high you wish them to go. Other bidders (if you find it too traumatic) would be your solicitor, the real estate consultant, perhaps an experienced member of your family or valuer. With the permission of the vendor and with prior notification, you may also bid by phone.
10% of the purchase price is required to be paid on the auction day if you are the successful bidder. It is considered if you bid at auction that you have bid unconditionally and for cash, i.e. if your bid is successful, you have bought the home. There is no subject to finance, or subject to sale clauses, you have bought the house. There is nothing to be wary of so long as you have done your homework and have sought the correct advice along the way. You are essentially making a cash unconditional offer. Possession is as per the Particulars and Conditions of Sale, and can be up to three months after the Auction date, particularly if you have a property to sell. Some owners will consider variations and these are recorded individually on an “Aside Agreement” to allow potential buyers to be able to bid on the day. Chattels are normally mentioned in the Particulars and Conditions and you look for them and make sure they tie in exactly with what you believe is being left in the home.
Some owners may consider selling before Auction day, some may not. They would normally need to believe that the offer was a very good one to convince them to sell prior to auction. Because the property is going to auction, if an acceptable pre-auction bid is tabled all interested parties are contacted.
The conditions of sale state that the vendor has the right to bid himself or through an agent or through the auctioneer. This bid may be used to start the auction or by the auctioneer during the auction to increase the bidding. The auctioneer will disclose all vendors bids. If someone else will be bidding for the vendor, other than the auctioneer, that person will be identified before the auction. Vendor bids WILL NOT be exercised once the reserve has been reached.
This is the contract that you will sign if you are the successful bidder on the day. It is simply a contract that spells out the conditions under which you have bought the home (see Q6), and binds you to the purchase of the home. It also binds the seller to sell to you as per the auction bidding. The Particulars and Conditions are available prior to the auction. If you have any doubts on wording and the clauses included, you should consult the sales consultant concerned or your solicitor.