A Buyers Guide to Keeping Auctions Simple
Buying a property at auction can be an exciting and rewarding experience – providing you have done your research and are thoroughly prepared.
The Auctions are seen as a fair and equitable way to buy and sell with open competition resulting in a true market value for both buyers and sellers. The history of auctions dates back to biblical times and today not only property, but things of great value (such as antiques, fine art, jewellery and bloodstock) are bought and sold through this process. With the growth of the internet, online auctions are also going from strength to strength. Auctions are exciting events and can be less stressful than the often protracted negotiations associated with other forms of sale. When buying at auction you can see the competition and bid with confidence.
Once you decide you want to purchase an auction property, take time to gather all the necessary information you need to ensure you’re comfortable and prepared for auction day. Your sales consultant will be able to provide you with some of this information, however we encourage you to seek advice from other professionals to ensure that you are adequately prepared. Remember: an auction sale is final and legally binding.
All Ray White Bream Bay & Waipu Auctions are run in accordance with the REINZ Code of Practice for Real Estate by Auction and REAA Guidelines.
Before Auction Day
- Inspect the Property. You can inspect the property as many times as you like prior to the auction. Satisfy yourself as to any building or structural matters – you may wish to obtain a building report from a reputable company specialising in “pre-purchase” inspections. The salesperson will disclose to you any known defects with the property. (These will also be disclosed in the written Auction Conditions of Sale).However you may wish to engage an independent specialist, builder or plumber to advise you on the condition or structural aspects of the property.
- Report Your Interest. Let your salesperson know that you have interest to ensure you are kept fully informed of all developments and to ensure you are contacted should a pre-auction offer be made.
- Market Research. Ensure you understand the market and have a feel for what similar properties are selling for. Allens can provide you with prices of similar property sales in the area. Alternatively you can arrange for an independent assessment from a registered valuer as a guide.
- Finance. Ensure your finance is in place prior to bidding as all auction purchases are unconditional. If you are the successful purchaser at the point of signing the contract you will be required to pay a sum of 10% of the purchase price. Consider the amount you borrow carefully. We do not recommend borrowing above your means, but do remember that property is a long term investment and nothing is more frustrating than losing your dream for the sake of a few thousand dollars.
- Auction Documentation. Prior to the auction familiarise yourself with the conditions of sale – such as the settlement and possession date, chattels and any special conditions. This documentation will be made available for your inspection. ( Note: If you wish to alter any of the standard conditions (usually pertaining to settlement or deposit) this may be arranged through the salesperson if the vendor is in agreement (Side Agreement). This must be done prior to the auction.)
- Legal Advice. We encourage you to seek legal advice and have your Solicitor check the title of the property prior to bidding.
Satisfy yourself as to any local authority compliance issues – the vendor may provide an up to date LIM (Land Information Memorandum) to help with this. We suggest you give this document to your solicitor to check. We recommend you also get your solicitor to peruse a copy of the Auction Conditions of Sale (Certificate of Title attached) to satisfy yourself there are no contractual issues pertaining to the sale. These Conditions of Sale will also state the chattels, settlement date, any special clauses relating to the sale and, as stated above, any known defects. Check the chattels list to ensure there are no surprises upon settlement. - Attend an Auction. If the auction process is new to you, it is a good idea to familiarise yourself with the process prior to bidding. You’re welcome to attend any of our auctions which are generally held on Fridays at 12.00pm in our Ray White Bream Bay Marsden Office, 6/30 Rauiri Drive, One Tree Point. Call us on 09 433 0334 to find out when our next auction is.
- To comply with the Real Estate Agents Act 2008, you will be given a guide, approved by the independent Real Estate Agents Authority entitled New Zealand Residential Property Sale and Purchase Agreements Guide. Make sure you read this docvument thoroughly.
At the Auction
- Before Bidding Begins. Obtain any last minute information you may need from your Sales Consultant. Our Auctioneer will begin by reading the main points of the terms and conditions (not the entire contract.) He may then showcase the property pictorially before calling for an opening bid.
- Bidding. To make a bid you simply have to make a gesture that can be plainly seen by the Auctioneer. You can call out, nod your head or raise your hand to attract attention. Our Sales Consultants are trained to assist you through the bidding process should you need help. At times potential bidders and buyers may hold back and wait for others to do the bidding, wait for the auctioneer to take $1,000 bids, or for the property to be “on the market”. Given this, the Contract of Sale and the Sale of Goods Act 1908 permits the auctioneer to place bids on the vendors behalf in order to move bidding towards a price level acceptable to the vendor. Any vendor bids will only be exercised by the auctioneer at his discretion and will be below the reserve price and below a price level which the vendors would consider accepting (therefore helping buyers to buy – not penalising them in any way).
- Reserve Price. Most auctions are conducted subject to a “reserve price”, which means that the owner has nominated a price below which the property may not be sold. Once the bid price exceeds the reserve, the Auctioneer will announce that “the property is on the market” or “the property will be sold” – at which point the property will then be sold to the highest bidder.
- ‘Passed In’ This is a term used when bidding does not reach the reserve at an auction. The Auctioneer will announce that the property will be passed in and will invite buyers to make an offer after the auction – with the highest bidder having the first chance to negotiate their offer.
- After the Auction. The successful bidder will be required to sign a Sale of Real Estate by Auction agreement and pay the deposit (10% of the purchase price) on the fall of the hammer.
Good luck with your purchase.