Wellington Real Estate Market

A guide to buying by Auction

Find out from your agent when the date, time and where the auction will be held

Do your homework

·                 Arrange your finance 

·                 Sell your own property (if required)

·                 Search the Certificate of Title

·                 Investigate any other relevant matters so you can bid for the property with confidence

We suggest you attend an auction to become familiar with the process (prior to bidding at one).

Careful preparation is important if you want to feel comfortable knowing that you have all the information needed to successfully bid at auction to enable you every chance to purchase the property.

What is a real estate auction?

Auction is a form of marketing using intensive advertising, designed to capture the maximum attention of buyers within a set time frame.  The process is a means of purchasing real estate through public negotiation to determine the true value of the property.

What is the reserve price?

The reserve is set by the vendor on the day of auction or the day prior and is always kept confidential between the auctioneer and the vendor. 

Can I buy before auction?

Yes, in some cases you can.  All offers prior to auction must be cash unconditional.  You simply submit your offer to your agent on the auction contract of sale and if the price and settlement date are agreed to, the contract is then signed and the property is sold before auction.

I can’t buy this house because I have to get finance

That’s ok.  You can organise through your bank or financier, approval to bid up to a price that you are prepared to pay.  This is simple to organise and only takes a couple of days.  You must do this before you bid at auction.


I want to buy it, but I have a house to sell

There are two answers.   If you are in a sound financial position you may organise a bridging loan.  The other way is to buy on a longer settlement date, giving you time to sell your house.  Talk to your bank or mortgage broker.

What price do I have to pay to buy the property?

This is the price YOU are prepared to pay.  Other people will perceive different amounts.  Generally, your price will be established by what properties have sold for around the area and the particular features that the home offers you.

What if the house doesn’t sell?

If the reserve price is not reached, it is passed in to the highest bidder.  The highest bidder then has the first right to purchase the property at a price acceptable to the vendor, otherwise the property will be offered for sale to all other interested parties.

What contract do we sign and what are the standard conditions?

The contract is the standard contract on display at the auction.  The usual conditions of purchase at auction are:

·                10% of the purchase price paid at deposit: either by cash, bank cheque or personal cheque.

·                Settlement date is usually between 30–90 days from the signing of the contract.

 

Your Harcourts property consultant

Is specially trained to assist you if you have any questions or if you require further information about auctions.

You are welcome to view the property by revisiting prior to the auction day by making an appointment with us or visiting at “open home” times.  A time to arrange inspections with builders, plumbers, or any other specialists, is by arrangement.  This will to give you confidence about the property.

You probably won’t know the price that the owner will sell the property for but you can make an educated guess.  Research the market as closely as you can.  We can help you find out the selling prices of similar properties that have sold in similar areas.  If you wish, you can arrange for an independent valuation.  We will help and advise you on all these matters.

Sales by auction are unconditional, so it is vital that you have your finance confirmed before you bid.  To avoid last minute pressure it is best to arrange bridging finance or mortgages well before auction day.  Again, we can help you, if you do not already have a mortgage manager helping you. 

We recommend that you seek legal advice.  Have your solicitor inspect the Certificate of Title of the property and investigate all legal matters relating to your purchase.

Make sure you are familiar with all the details and conditions of sale prior to the auction, such as the deposit, possession date and the balance of payment details.  Read and understand what will be sold with the property (including the chattels).

Subject to the reserve price being reached, the highest bidder should be the purchaser.

Bids may be communicated: 

·                Verbally

·                By a show of your hand

·                By a distinctive gesture e.g. nodding head

The Auctioneer usually nominates the amount of the bid he is looking for.

The Auctioneer is the sole arbitrator of any disputed bid.

The deposit required is as stated in the contract and is usually 10% of the purchase price.  Personal cheques are acceptable.

Contracts are sent to the solicitors immediately after each sale.

The successful bidder is expected to sign the contract in his/her name except where written authorisation has been handed to the Auctioneer prior to bidding.


 

Conduct of Tender

A tenderer may submit more than one tender.

Tenders are to be enclosed in a sealed envelope and must be received (whether by post, delivery or facsimile) at the office of the vendor’s agent prior to the tender closing date.

A tenderer may be asked to sign a “multiple offer” form.

Each tender shall constitute an irrevocable offer which shall remain open for acceptance by the vendor at any time prior to the tender acceptance date, but without acceptance shall thereupon lapse and be of no further effect. 

Unless the tender is submitted with specific special conditions inserted, there are no special conditions applying. 

The vendor is not obliged to accept the highest or any tender and reserves the right to:

·        Reject any informal tender

·        Refuse to accept any tender including any tender not properly complying with  

  the conditions of tender

·        Negotiate with a tenderer to the exclusion of others

·        Waive any minor irregularity or informality in the tendering process

·        Decline to accept the highest or any tender

·        Call a deadline between tenderers

·        Call tenderers to an auction

·        Re-advertise for tenders

A binding contract is created upon acceptance of a tender. The vendor’s agents will convey acceptance of the successful tender to the purchaser firstly by telephone and then by letter or facsimile.