What to Expect When Buying at Auction

Auctions are a popular way to sell property in South Australia, but uncertainty around the process means they’re not everyone’s favourite way to buy.

You see your dream home advertised, then notice it is for sale by auction. Cue the groans! Property auctions are a nerve-wracking process for many buyers, but knowing what to expect on auction day and what you need to do prior to the auction can make it much less stressful.

You’ve walked through the property a few times, and you’re keen. Now it’s time to do your due diligence because when you buy via auction there is no ‘subject to’ clause in the binding sales contract.

So, arrange a building and pest inspection as soon as you’ve decided you are keen on the property and ensure that the report can be provided to you well before auction day.

Next, carefully read the Form 1 (Vendor’s Disclosure Statement). This document provides valuable information about the property and is available to view in the agent’s office at least three business days prior to auction as well as at the auction site. If you need clarity, ask your conveyance or solicitor to check the document.

Then it is time to organise your loan. Your lender must have approved unconditional finance before you bid, because a contract of sale by auction is never subject to finance or the sale of another property.

Have the deposit money available to pay immediately upon the fall of the hammer if you are the successful bidder. You can negotiate the settlement period and the deposit amount before auction day if need be, otherwise settlement is generally 30-45 days and the standard deposit is 10%.

Before or on auction day you must register to bid with the agent. You’ll need photo identification to register.

The day has come! You have your building and pest inspection report and your finance is fully approved. Your deposit is ready to be transferred if need be, and you are fully committed to proceeding with the sale if you are the final bidder, because there is no ‘cooling off’ period or ‘subject to’ conditions when you buy at auction.

Put yourself in a position where the auctioneer can easily see and hear your bids. Once bidding reaches the vendor’s reserve price, the auctioneer will say the property is on the market, which means it will be sold. If the bidding doesn’t reach the vendor’s reserve price, the property will be passed in and private negotiations can commence.

If you are the successful bidder, you will sign a binding contract of sale and pay the deposit immediately.

When the property is passed in, the first opportunity to negotiate privately goes to the highest bidder. If that is you and you negotiate successfully on the same day as the auction, the sale still falls under auction conditions so there is still no cooling off period, the sale remains unconditional, and the deposit must be paid immediately.

You will be invited by the agent to step inside for contact signing and to pay the deposit. Then you must organise same-day insurance for the property as the unconditional contract of sale comes into effect immediately.

The legal transfer of ownership process will be handled by your conveyancer or solicitor, and settlement will occur typically within 30 to 45 days if you haven’t negotiated a different settlement period beforehand.

Lastly, it’s time to break out the champagne and celebrate buying your brand new home!

Check out our upcoming auctions and if there is a property you’re keen on, give us a call. Our friendly agents are happy to talk you through the auction process.