If you emerged victorious in the bidding battles, and saw the price surpass the reserve, then congratulations – you have bought a property at auction!
Normally, immediately after the auction you will be required to sign the contract, and provide the 10 per cent deposit.
This is why we want you to make sure your finances are in order – in Australia, there is no cooling-off period. Once you buy, you’re locked into the deal.
Once you have signed a contract it will be deemed that you have an equitable interest in the property and you should immediately take out insurance.
What to do When a Property Passes In
Of course, not every auction has a happy ending under the hammer. Sometimes bidding doesn’t get above the reserve, whether because of a high price set by the seller or some cautious bidding on the buyers’ end. Sometimes, no-one has made a bid at all!
Whatever the reason, when this happens the property is passed in, and does not sell. This is not uncommon.
While this result may seem disappointing, if you were the highest bidder before the auction ceased you are given the first opportunity to negotiate on the property, however other would be buyers can also compete for the property so make sure you are realistic with your offer. Vendors have usually become educated to the market during the process and can be more realistic with their expectations around price and conditions.
How to put in a pre-auction bid
If you’re impatient to get your foot in the door on a property, why wait until auction day? You can make a pre-auction bid to get a home before the bidding opens. Just make sure you do it right and try to remove any emotions from the process.
These steps will make your offer straight to the point, and this shows the seller that you mean business.
- Make your pre-auction offer in writing.
- Have a contract and deposit cheque ready.
- Set a time limit.
Making a pre-auction offer is often about getting the house you absolutely want, so let the seller know you’re in this for the long run.
Make sure the price is right
Don’t jump in with an offer that is miles below the vendor expectations, as it isn’t likely to be taken seriously. In fact, it may even make the seller reluctant to work with you.
Making sure you have done your research is your best weapon when it comes to negotiation. Knowing the market, the value of the property you are looking at and what your best offer would be is very important.
Once you know all this, make an offer that is realistic – don’t be scared to put your best offer in as it may mean the difference between walking away with the property or not. Also remember that working for a quick purchase can mean the tradeoff is in the cost, so be wary of your budge and if the prices is too high be prepared to walk away.
Get Your Timing Right
By waiting until close to the auction date before pre-offering, sellers and agents will have a concrete idea of the interest in a property. Agents will not disclose offers to you as a buyer but may disclose what offers the vendors refused to accept. You can use this to your advantage and undercut the competition with an eleventh hour bid, and secure a great home.