The straight answer to this question is YES!
To bid at auction you need to be bidding in cash dollars. 5% deposit will be required by 5pm on the next business day following the auction and the balance is due on the possession date. However, as explained below, you may talk to the auctioneer about extending the possession date to give you longer to arrange money. Also with an auction, you may have a lead-up period of up to four 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 find as marketers that some people literally become experts in a particular price range and they are able to indicate almost exactly what the house is worth. They do this by drawing on the experience of the other homes they have inspected 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 refer you to other homes of similar size, style and attributes where an actual asking price is indicated. Thereby you will be able to form an opinion on the auction property’s worth. You may also decide to get an independent valuation done.
If you do need to sell your home to purchase there are a couple of options available:
1. Talk to your finance broker and discuss ‘Relocation Finance’ which is an affordable version of the old ‘Bridging Finance.’ Banks have come a long way and are offering very competitive packages in this area nowadays.
2. Talk to your consultant about whether they have somebody ‘waiting’ for a home like yours as an early sale may be closer than you think. It is worth remembering that 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 existing home sold.
Most lending institutions are now conversant with the modern auction techniques and once you have worked out the price you believe the property is worth as in Q2, when you discuss this with banks or lending institutions, you will find they believe it quite acceptable to agree to lend you money up to a certain ‘bidding price.’ You will then know just how high you can bid at auction. Overall though, the fact that you are borrowing money should not prevent you from bidding or buying at auction.
Of course! Anyone may bid on your behalf on auction day as long as you formally register their name with the auctioneer prior to the auction. They may, if they are a professional person, require written advice as to how high you wish them to bid. Other bidders nominated could be your solicitor, the real estate consultant, perhaps a trusted member of your family. With permission from the vendor and with prior notification and formal registration, you may also bid by telephone.
* 5% of the purchase price is required to be paid by 5pm on the next business day following the auction with a smaller portion of the 5% payable on the auction day if you are the successful bidder. That is, you need your cheque book and the ability to have a balance in your account to cover the deposit once it is banked.
* 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, subject to a house sale or a building and pest inspection – 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 stated in the Contract & Conditions of Sale, and can be up to 3 months after the auction date particularly if you have a property to sell. However, longer than the standard 30 days will require prior permission from the vendor if you wish to bid.
* Chattels are normally mentioned in the Contract & Conditions of Sale and you look for them and make sure they tie in with exactly what you believe is being left in the home.
* GST will also be mentioned in the Contract & Conditions of Sale and you should check that this tallies with what you believe. NB – that on residential home there is normally no GST payable.
This is the contract that you will sign if you are the successful bidder on the day. It is simply a contract that details the conditions you have bought the home on: 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 Contract & Conditions are available and displayed at the home at open homes leading up to auction and of course on auction day. If you have any doubts on wording, clauses included, then you should seek clarification from the onsite sales consultant concerned or your solicitor.
Note that if you buy before auction or at the auction you will use the normal Contract & Conditions of Sale Agreement. If the property is ‘passed in’ and you are then interested in offering on the property, the standard Contract designed by the Qld Law Society and REIQ will be used.
Auction is a complex process that needs to be managed well, by a mature and experienced consultant. The Harcourts Noterom Team will only allow experienced consultants to work auction programs.
If you have any questions, queries or concerns or would like any part of the auction process clarified, we would be more than happy to hear from you.