Auctions have become an increasingly popular way to sell property in Queensland. Purchasing a property at auction is on very different conditions to the more common private treaty contract process, so it’s extremely important to understand your obligations before the auction.
Most importantly, if you are the successful bidder when buying a property at auction there is NO cooling off period and, unless the auction conditions specifically provide otherwise (which is rare), provided that the reserve has been met you will be unconditionally bound to sign and complete the contract from the fall of the hammer.
The following checklist and information will ensure you can bid with confidence.
1. RESEARCH – Make sure you research the local market to get an understanding of the market and recent prices for comparable properties in the area you want to buy.
2. INSPECT the property BEFORE the auction– to ensure you understand what you are bidding on.
3. Property VALUATION - You may wish to engage a professional valuer to conduct a valuation of the property as a reference tool and safeguard against personal biases influencing your estimation the property’s worth.
4. INSPECTIONS/SEARCHES – It is good practice to request access for a building and pest inspection where a recent inspection report from a licenced inspector is not provided by the Seller’s Agent. Similarly, any searches you would usually run to investigate the property have to be ordered through your solicitor with enough time to review the results prior to the Auction (at least 14 days is a good guide for most investigations). If you do not conduct searches and discover after the auction that, for example, the land is soon to be resumed for a new road or is subject to encumbrances that will prevent your intended use of the land, you might be bound to complete the purchase anyway.
5. Have an experienced LAWYER look over the CONTRACT of sale well before the auction – they will be able to explain and clarify the terms and conditions to you and offer advice. In some cases you may be able to negotiate changes to the contract before the auction.
6. FINANCE – If you are the successful bidder you will be required to pay the deposit immediately when you sign the unconditional (legally binding) contract. It is important that you have pre- approved finance in order and are prepared to write a cheque/effect transfer of the Deposit (often 10% of the Purchase Price) on the spot on the day of the auction. Acceptable methods of payment should be confirmed with the Agent in advance.
7. BIDDING – The auctioneer can accept bids on behalf of the Seller and may even make bids themselves on behalf of the Seller up until the reserve price has been reached. The auctioneer must announce that a bid is a “vendor bid” and such an announcement tells you there is a reserve price that has not yet been reached. If you are too emotionally invested you are able to get someone to bid on your behalf so you don’t “go nuts” on the day or overpay for lack of a good poker face:)
To ensure fairness to both buyers and sellers at auction, legislation in Queensland requires all bidders to be registered to bid (provide name and address and proof of identity). False bidding is illegal in Queensland.
Conveyancing in Queensland can be more complicated than in other states of Australia so it’s important to always use an experienced property lawyer to ensure a smooth transaction.
SPM Law will be happy to help with your next property purchase. Call us today for an obligation free quote on 5440 4800.