When a property is purchased at auction, it is deemed to be an unconditional contract, meaning it's not subject to finance or any other standard conditions. The successful bidder must sign the contract immediately and pay a deposit, normally equal to 10 per cent of the purchase price. So, how can purchasers prepare to bid at auction? If you are considering buying a property at auction, there are several things you need to arrange prior to auction day.
Firstly, organize your finance and make sure you hold confirmation of finance approval in writing. Remember the property will need to be valued as part of the finance process so don't try to get finance 2 days before the auction, it wont happen. You will also need to think about how to pay the 10 per cent deposit if you're successful on auction day. It might be a good idea to ask the real estate agent what form of payment is acceptable to the vendor.
Secondly, if you've inspected the property and plan to bid on auction day, obtain a copy of the contract in advance and have your solicitor review it. This will ensure there are no surprises in the contract that you were not aware of.
Most legal professionals will charge you for each contract they review, although this may vary depending on the complexity of the contract or the solicitor you use.
Remember, it may take your legal representative several days to review the contract, so the earlier you can get a copy of the contract to them the better.
Another task to consider prior to auction day is completing a building inspection. Building inspectors will normally go over the property with a fine-tooth comb (including crawling under the house and in the roof) and report any defects which may make the property unsafe or costly to repair.
Once you have finance in place, made sure the contract doesn't contain any surprises and had the property thoroughly inspected, you're ready to bid. Good luck!
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