Buying at auction is probably the simplest and most straightforward method of purchasing a property. The process is quick, transparent and simple.
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 Code of Practice of the REINZ which are available for your perusal.
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:
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 the Licensee Salesperson on the “Sale by Real Estate by Auction” form. You will note that this form provides only for a totally unconditional offer/price. The 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. If the price is sufficiently agreeable to the Vendor then the contract is completed and the property sold before Auction.
Q. I CAN’T BUY AT AUCTION BECAUSE I HAVE TO GET FINANCE
A. That’s okay. Our Licensee Salesperson 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’ for immediate negotiation with the highest bidder. If this is the case, the highest bidder will be given a very limited time to review and submit an offer 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:
Once you’ve identified the property you desire, the simple steps to follow are:
Preparing for the auction:
Note: If you wish to alter any of the standard conditions within the Auction Conditions of Sale, discuss your requirements with the Licensee Salesperson 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.
We always advise people 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 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.
Your Ray White Licensee Salesperson is especially trained to assist you should you have any questions or if you require further information about Auctions.
Good luck with your purchase.