Your Bids Successful Now What?

If you emerged victorious in the bidding battles, and saw the price surpass the reserve, then congratulations – you have bought a property at auction. Here are the steps you need to understand so it all goes smoothly.

But sometimes a property does not sell, so here is what do you need to know when this happens.

We also look at what happens when a property passes in

What to do When Your Bid is Successful

If you emerged victorious in the bidding battles, and saw the price surpass the reserve, then congratulations – you have bought a property at auction!

Normally, immediately after the auction you will be required to sign the contract, and provide the 10 per cent deposit. This is why we want you to make sure your finances are in order – in Australia, there is no cooling-off period. Once you buy, you’re locked into the deal.

Once you have signed a contract it will be deemed that you have an equitable interest in the property and you should immediately take out insurance.

Settling the Sale – What You Need to Remember

There are many things you’ll need to organise between the time you sign the contract of sale and the settlement date.

During the settlement period, you will need to fulfil the conditions outlined in the contract of sale as well as any other obligations you have.

Finance

Before the settlement date rolls around, you will need to contact your mortgage lender and organise your finance for the home. Whether you’re closing a bridging loan, using a loan portability feature or taking out another mortgage, your finance needs to be organised as soon as possible.

The balance of the home is due on settlement day and will usually be paid to the seller once the lender has authorised the payment.

Conditions

If you outlined any special conditions in your contract of sale, now is the time to fulfil these. For instance, the sale of your home may be subject to an inspection, valuation or some type of work by the owner. For a smooth transaction, this needs to be organised well in advance to ensure everything is completed by settlement day.

Handover

Once both parties and solicitors have written to the agent to confirm the sale has settled, the agent can organise the handover of the keys to the new owner.

This can take a couple of hours to be finalised, so it’s a good idea to organise your removalists to come to your home the day after settlement.

What Happens if a Property Passes In

Of course, not every auction has a happy ending under the hammer. Sometimes bidding doesn’t get above the reserve, whether because of a high price set by the seller or some cautious bidding on the buyers’ end. Sometimes, no-one has made a bid at all!

Power Play

While this result may seem disappointing, it opens the door for you as a buyer to start or continue negotiations on the property. Vendors have usually become educated to the market during the process and can be more realistic with their expectations around price and conditions.

If you find yourself in this situation be aware that all other parties can now compete as well so avoid making unrealistically low offers in the wake of a property not selling under the hammer.

Tips to Help You Bid With Confidence at Your Next Auction

Be approved – Make sure that your finance has been approved before attending any auction. This not only gives you a firm picture of what you have to spend, it also guarantees that you’ll be able to come up with the cash if your bid is accepted. A sale made at auction is binding so you’ll need to be sure you have the financing behind you.

Know your limit – It is essential that you set a maximum amount that you are prepared to spend before you start bidding at an auction. Auctions can easily become heated and it’s easy to be swept up in a bidding war, resulting in parting with more money than you’ve bargained for. If the price goes above your max, pull the pin.

Cash on the hip – Make sure that you’ve got a 10 per cent deposit that you can access on the day, as this will need to be provided once the deal is done.

Consult a lawyer – Ensure that you understand all the legal implications and requirements of an auction purchase before you bid. Once you’ve agreed to buy at auction, there’s no turning back.

Lay of the land – Never bid on a property that you’ve laid your eyes on only once. Make sure you inspect the property as many times as possible, and at different times of the day, to see how it is affected by sunlight and traffic. Be sure it’s in good nick – Don’t bid on a property without the proper due diligence. This means a building and pest inspection from a qualified specialist.

What’s it worth? – Make sure you have a clear picture of the property’s value before you go to an auction. Invest in an independent qualified valuer to get an appraisal of the property’s true worth before you place a bid.

Befriend the agent – It is well worth getting to know the selling agent prior to auction to find out as much as possible about the auction process. While this may not result in getting a better price for the property, it will help show that you are a serious buyer.

Provide the paperwork – Before bidding, you’ll need to register, and that requires producing certain identification. Make sure that you have your driver’s licence, and other appropriate documentation to validate your identity.