Trinity Realty Pty Ltd
58 Marion Street HARRIS PARK 2150 NSW
T: 02 9633 4000
E: danield@trinityrealty.com.au
Purchasers

Buying a Property at Auction

Is the property you like being sold by auction? Here are some answers to some commonly asked questions about buying a property at auction.

Q. What is a real estate auction?

A. Auction is a form of marketing of a property through intensive marketing mediums designed to capture the maximum attention of buyers within a set timeframe. The process is a means of purchasing real estate through public bidding to determine the true market value of a property.

Is the property you like being sold by auction? Here are some answers to some commonly asked questions about buying a property at auction.

Q. What is a real estate auction?

A. Auction is a form of marketing of a property through intensive marketing mediums designed to capture the maximum attention of buyers within a set timeframe. The process is a means of purchasing real estate through public bidding to determine the true market value of a property.

Q. What is the reserve price?

A. The reserve price is usually set on the day of the auction by the vendor. The only people who will know the reserve price are the real estate agent, the auctioneer and the vendors. The reserve price is generally established from purchasers' feedback and the vendor’s own belief.

Q. How do we bid at the auction?

A. You must register with the agent prior to the start of the auction, if you wish to bid. The agent must provide you with a unique identifier (such as a number or plaque). Bids will only be accepted by registered bidders on the day of the auction. The auctioneer is allowed one vendor bid (usually the first bid) which must be announced by the auctioneer at the time.

Q. Can I buy before the auction?

A. Yes. In most cases you can. You simply submit your offer in writing to the agent and if the price and conditions are agreed to by the vendor, contract will be exchanged. It is unlikely the vendor will accept a conditional offer, for example, subject to finance approval, so you will need to be certain you can settle as there is no cooling off period after contracts are exchanged with a section 66W certificate from your solicitor.

Q. I can't buy at auction because I have not had my finance approved.

A. That's OK. You can organise a pre-approval through your bank or broker to bid up to an amount that you are prepared to pay.

Q. I want to buy it, however I have a house to sell.

A. If you are in a sound financial position, that is, you have a large amount of equity in your existing home, you may qualify for "Relocation Finance". Speak to your banker or broker about this option.

If the vendor is agreeable, another solution is to buy with an extended settlement period, giving you sufficient time to sell your existing home. Any special conditions like this must be negotiated between the solicitors before the auction commences.

Q. What price do I have to pay to buy the property?

A. This is the price you are prepared to pay for this property. Be prepared however for someone else being prepared to bid more than you for the property. Our best advice is to not bid above your budget as you don’t want to get into financial trouble if interest rates increase.

Q. What if the house does not sell?

A. If the reserve price is not reached the property may be "passed in". This means that the auction is over and the property is now "For Sale" and anybody with interest in the property may begin negotiations. Usually the last bidder or “under bidder” is given the first right to negotiate a deal.

Q. What contract do we sign and what are the standard conditions?

A. The contract is the standard Law Society of NSW and REINSW approved contract. This contract is on display before and during the auction. The usual conditions at auction are 10% deposit of the purchase price and settlement 42 days after. However these terms may be different or varied prior to the auction, in which case the auctioneer will announce this to everybody before the auction begins.

Remember, if the terms do not suit you, your solicitor can request a variation in the contract’s conditions, for example 5% deposit or 60 days settlement before the auction day.




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