BUYING AT AUCTION
Buying at auction is probably the simplest and most straightforward method of purchasing a property. The process is quick, transparent and simple.
Sukh Singh is highly skilled in this process and will help you through the process.
HOW CAN WE BUY THIS HOME?
Some answers to commonly asked questions about Auctions:
Q. WHAT IS A REAL ESTATE AUCTION?
A. Auction is a form of marketing a property through intensive advertising mediums designed to capture the maximum attention of buyers within a set time frame. The process is a means of purchasing Real Estate through public negotiations to determine the true market value of the property.
Q. WHAT IS THE RESERVE PRICE?
A. The reserve price is usually set on the day of the Auction by the Vendor and remains confidential at all times. The reserve is generally established by the Vendor taking into consideration the comments and price indications from potential buyers. Our Auctions are conducted under the REINZ Auction Best Practice Guide. The Auctioneer will detail the 'rules' of the Auction prior to calling for an opening bid, so that everyone is very clear as to how the Auction will be conducted.
Q. HOW DO WE BID AT THE AUCTION?
A. Simply attract the attention of the Auctioneer by:
1. Putting up your hand
2. By calling out
3. Nodding your head when you catch the auctioneer's eye.
The Auctioneer usually nominates the amount of the bid he is looking for. If you are the successful bidder, you will be asked to pay the deposit and sign the contract.
Q. CAN I BUY BEFORE AUCTION?
A. Yes, depending upon instructions from the Vendor. You simply submit your offer to us on the 'Sale by Real Estate by Auction' form. You will note that this form provides only for a totally unconditional offer/price. Our real estate company has clear obligations to the Vendor to ensure that all other registered buyers have an equal opportunity to also submit their offer.
Q. I CAN'T BUY AT AUCTION BECAUSE I HAVE TO GET FINANCE
A. That's okay. I can refer you to a Mortgage Broker or you can arrange finance through your bank or Finance Company.
Q. I WANT TO BUY IT, BUT I HAVE A HOUSE TO SELL
A. 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 and to settle your house.
Q. WHAT PRICE DO I HAVE TO PAY TO BUY THE PROPERTY?
A. This is the price YOU are prepared to pay. Other people will perceive different amounts. Generally, your price will be established by what property has sold for around the area and also the particular features that the home offers you.
Q. WHAT IF THE HOUSE DOESN'T SELL?
A. If the reserve price is not reached, the Auctioneer will indicate clearly if the property will be 'passed in' to the highest bidder. If this is the case, the highest bidder will be given a very limited time to review and purchase the property at a price acceptable to the vendor before the property is open for negotiations with any other party.
Q. WHAT CONTRACT DO WE SIGN AND WHAT ARE THE STANDARD CONDITIONS?
A. The contract is the REINZ approved Auction contract, copies of which are available prior to or at the Auction. This contract has been prepared by the Auckland District Law Society and the REINZ. Two of the main provisions are:
1. 10% of the purchase price paid as deposit: either by cash, bank cheque, or personal cheque.
2. Settlement date as detailed on the contract - this can range from 30 to 90 days or longer.
Once you've identified the property you desire, the simple steps to follow are:
Preparing for the auction:
Let Sukh 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.
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.
Satisfy yourself as to any local authority compliance issues - a LIM (New Zealand Land Information Memorandum) is normally supplied by the vendor with the auction terms of sale – if not, it can be obtained from the Council. We advise you to give this to your solicitor to check prior to auction day.
You may wish to get your solicitor to peruse a copy of the Auction Conditions of Sale to satisfy yourself there are no contractual issues pertaining to the sale. These Conditions of Sale will also state the chattels, settlement date and any special clauses relating to the sale.
Ensure your finance is in place 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 to our trust account - this is standard for all auctions in New Zealand.
Note: If you wish to alter any of the standard conditions within the Auction Conditions of Sale, discuss your requirements with us who will, in turn, then discuss your request with the Vendor - if the Vendor is in agreement then the contract will be altered to reflect those arrangements. This must be done prior to the auction.
It's good advice to arrange finance a little beyond what you would like to pay - property is a long term investment and nothing is more frustrating than losing your dream home for the sake of a few thousand dollars.
There are no tricks to bidding - simply let the Auctioneer know you are bidding (usually by raising a hand). If the property has reached the Reserve and you hold the highest bid you will become the joyful new owner - if it goes beyond you, you will have a period of disappointment, but knowing that you had equal opportunity to buy the property and also that you have learnt a great deal about the current market and are ready for investment in the next appropriate property you find.
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 Vendor’s behalf in order to move bidding towards a price level acceptable to the Vendor. The Auctioneer will be specific in naming/announcing that the bid is "on behalf of the Vendor."
Any Vendor bids will only be exercised by the Auctioneer at his discretion and will most certainly 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). This is set out in the Code of Practice of the REINZ which are available for your perusal.
Sukh is especially trained and experienced to assist you should you have any questions or if you require further information about Auctions.
Good luck with your purchase.