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Buying At Auction

By : 2017-09-11

Buying at auction can be a daunting process, but it doesn't have to be. With more homes than ever being for sale by auction, it’s likely you’ll come across many auction properties when you’re house hunting.

Let Jeremy O'Rourke take you through the process in this short video or read more about the auction process below.

 

BUYING AT AUCTION IS ONE OF THE MOST SIMPLE WAYS TO PURCHASE YOUR NEW HOME

It can remove some of the associated anxiety involved in making an offer lower than a vendor’s asking price and allows you to judge the value a property has to you without being biased by the asking price.

Additionally, the bidding process is transparent - you can see or hear what other buyers are offering. This open negotiation process can help you judge the true market value of a property.

ONCE YOU ARE INTERESTED IN BUYING A PROPERTY BEING OFFERED BY AUCTION THERE ARE SEVERAL STEPS TO TAKE.

1. MAKE YOUR INTEREST KNOWN TO THE SALESPERSON
Occasionally properties are sold prior to auction and by letting the salesperson know you are interested you will avoid it being sold without you being contacted. The salesperson can also assist you to get ready to bid.

2. ESTABLISH THE TIME, DATE AND ADDRESS OF AUCTION
There are many details to attend to prior to this deadline, so make sure you know the time frame.  Our auction rooms are located at 935 Victoria Street, Hamilton Central.  Limited parking is available so please arrive with plenty of time.

NB. Occasionally on site auctions may be held at the property. Please check the property details on our website to confirm what address the auction will be held at, or speak to your salesperson.

3. GET READY
The better prepared you are the easier your decision making will be.

Take a look at our booklet on buying at auction for some simple steps to ensure that your auction experience goes as smoothly as possible

A FEW IMPORTANT THINGS TO DO IN PREPARATION FOR AUCTION DAY


CONDITIONS OF SALE
Familiarise yourself with the conditions of sale and we advise you to seek the advice of your solicitor. Make sure you know the deposit amount, settlement date & which chattels are included in the sale.

CONDUCT OF AUCTION

The conduct of auctions is consistent for all auctions we run unless stated in the conditions and except for a mortgagee auction. Click here to view standard conduct of auctions.

SOLICITOR
Talk to your solicitor and ask them to check out the conditions of sale and the title to the property. If you have not used a solicitor before, ask your Lodge salesperson for a list or visitadls.org.nz

ORGANISE FINANCE
A sale by auction requires you to have your finance arranged before you bid. Your Lodge salesperson can direct you to a mortgage broker or bank to help you arrange your finance.

DUE DILLIGENCE

As you are buying free of any conditions you'll need to get your homework done on the property before you bid. This includes any building inspection or any other inspection you deem necessary.

KEEP IN TOUCH
Keep in touch with the salesperson.

BUYING BEFORE AUCTION DAY
In most cases, properties going to auction with Lodge can be bought prior to the specified auction date. However, there are certain conditions you must fulfil which your salesperson can explain to you.


AT THE AUCTION

BIDDING
The auctioneer will ask for an opening bid and will then nominate the increments by which the bidding can be raised. To make a bid, simply attract the attention of the auctioneer by:

  • Raising your hand; or

  • Calling out your bid; or

  • Nodding your head when you catch the auctioneer's eye.

RESERVE PRICE
The client usually sets the reserve price before the auction. The reserve is established as a result of feedback from interested parties during the marketing period. The reserve is the minimum figure that the auctioneer is instructed to sell the property for on auction day.

VENDOR BIDDING
An auctioneer can make what we call a vendor bid. Often the first bid is a vendor bid if purchasers are reluctant to start an auction. If, during the auction, an auctioneer does make a vendor bid they must declare it to all attendees so that everyone is absolutely clear that they have done so.

WHAT IF THE PROPERTY DOESN’T SELL AT THE AUCTION?
If the reserve price is not reached, the property is passed in to the highest bidder. The highest bidder is then offered the first right to purchase the property immediately after the auction at the vendor's reserve price. If a sale is not completed immediately following the auction, the property will be offered for sale to all other interested parties.

WHAT HAPPENS IF I BUY AT AUCTION?
If you are the successful bidder you are required to sign the auction contract and pay 10% of the purchase price as deposit; either by bank cheque or personal cheque or, in most cases, by electronic transfer. The settlement date is contained within the contract and this is the day that you will generally move in. Make sure you read our guide to settlement to understand what else you might need to organise prior to moving day or download it by clicking the download button.

 Buying at auction