Your Legal guide to buying at auction

Auctions are fast-paced and when you make a successful bid, unlike making an offer on a house, the auction is automatically unconditional should you place the winning bid. That’s why we always recommend that you get a reputable conveyancing lawyer to ensure that any conditions are understood and satisfied before you get to the auction.

Before you bid

When you bid for a house, you need to make sure that it’s actually a good investment. Here’s some of the background research that you’ll need to have done before you even turn up to the auction. 

Research the property

Take a look at the property, its location and its neighbourhood and be sure that you’re really sure this is the property for you. Then get a LIM and title search. Once you’re really sure then get your building report and finally work out the value of the property.

Talk to the real estate agent and your conveyancing lawyer

You’ll need to let the real estate agent know that you’re keen on the property. They’ll have the legal documents drawn up that you and your conveyancing lawyer will need to review including their terms, conditions and deposit requirements.

Check your finances

You’ll need to know how much you can spend on a home, but you’ll also need to let your mortgage broker or bank know that you are intending to bid, and which property you’re bidding on.

Then check any changes to the agreement with your lawyer 

If you want to make any changes to the agreement, or put any conditions on the sale your lawyer will need to create a variation of the agreement, and then see if the seller is happy to make these changes.

Make sure the auction date doesn’t change

Some sellers may accept a pre-auction offer. This may be a cheeky offer that is accepted without going ot auction, or it may mean they bring the auction date forward and that offer becomes the amount of the first bid.  If you’ve spoken with the real estate agent, especially if you have a copy of the agreement then the agent should notify you.

We offer a before-you-bid auction report to help you prepare to bid. 

The auction day

Check the location of the auction as it’s often not held at the address of the property. In fact, we recommend going to an auction to get familiar with the process on the day.

You should have already got a conveyancing lawyer to do an auction report on this property.

Arriving at the auction

You may need to register on the day. You’ll usually be given the approximate time of the auction and a bidding number. 

Getting ready to bid online

If you’re bidding online you’ll still need to register and get a number. Also double-check that you have the right software or app for this auction.

The starting price and the reserve price

The seller will set a ‘reserve’ price. this is the minimum amount the seller will accept for the sale of the property. You won’t be told what this price is. But the vendor may bid on their own property before the reserve is met. You’ll be told if this is what is happening and if they will even bid.

After the auction

When the house is sold

Once the house goes over the reserve the highest bid wins. The successful bidder will sign a sales and purchase agreement and pay a deposit.

Paying for the property

You’ll pay the agreed amount for the property on the settlement date which will be stated on the sale and purchase agreement. This is usually done by your conveyancing lawyer. For more information about what happens on the settlement day, read our FAQ here.

We can’t highlight the importance of getting a thorough report completed before you go to auction, which is why we have prepared an auction report package for you.

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