Tips for buying at auction and a FREE offer too good to miss!
The Central Coast real estate market is thriving while interest rates remain at their lowest point for several decades. Auction clearance rates are high, indicating a market on the rise.
Chances are, you have found yourself here because you are interested in purchasing a property in one of the many beautiful suburbs the Central Coast has to offer.
The problem is you are probably not the only person wanting to buy that dream property, and in this market competition is strong, leading many to disappointment when they cannot secure the property they have set their sights on.
This is often the case at auctions. Buying a property by private treaty is a slower, more planned process, but at auction you have the added stress of bidding against rivals in real time, and you can quickly get out of your depth.
At Mothers in Law Lawyers, we know how daunting it can be to front up to an auction, hoping beyond hope that you will be able to secure that dream home. It pays to be well-informed in any situation, not least of all at auctions.
So to help you on your way, we’ve put together the following tips you should consider if you plan attending (and bidding) at auction. After all, knowledge is power!
1. The selling price guide has probably been under-quoted.
Agents want “bums on seats” at the auction because the more bidders that attend, the higher the price is likely to be driven. They also know that prospective purchasers are less likely to turn up to an auction if the quoted price range is out of their budget, so they under-quote the expected sale price.
Do your research – don’t take the agent’s estimate at face value. You could waste hundreds of dollars on inspections only to find that the property was never within your reach. Sales details of comparable homes in the area are easily obtained online, as are inexpensive property reports.
2. Negotiate the deposit.
Generally, if you are successful at auction you will be required to pay a deposit of 10% of the sale price on the spot.
For many people, trying to arrange the deposit prior to the auction without having the certainty that you will be the successful bidder can often be difficult.
The prime goal for both agents and vendors is to get as many at the auction, so vendors will often accept a lower deposit if it means that more potential buyers are in a position to bid.
If paying a 10% deposit is not practical for you, ask the agent whether the vendor will accept a deposit of 5%. More often than not they will agree.
But be careful. Any negotiations prior to auction should be agreed in writing so the Contract can be amended if you are the successful bidder.
3. Do not rely on what the Agent tells you
The agent is there to sell a property and they are being paid by the vendor. Of course the better agents will always try their best to act in good faith towards all buyers (as they may be future clients), but they may not have the legal knowledge to advise you about the intricacies of a contract. If the agent tells you something such as “Oh sure, you can knock that wall down” or “no, there’s no asbestos”, don’t take their word as verbatim and make sure you check the Contract and do your research to ensure what they tell you is correct.
Contracts will often contain clauses that prevent you from relying on representations made by the agent prior to the signing of the Contract.
4. Don’t give too much away
Agents are nice people, they really are, but we’ve said it before and we’ll say it again: they are there for one sole purpose - to sell a property. Any information you give them can be used against you, so don’t offer too much on what you think of the property. Stay vague and aloof and keep your cards close to your chest.
Certainly don’t reveal the maximum amount you are willing to pay. This can impede negotiations at auction, and cost you unnecessary dollars.
5. Take a friend to the auction
Buying a property at auction can be thrilling, but it can also be hard not to get swept away in the moment and bid above your budget.
Take someone to the auction and tell them your budget so they can keep you in check in case you get carried away.
6. Bidding below the reserve
You will have seen it on the television, that magic moment when the auctioneer announces ‘Ladies and Gentlemen, the property has reached reserve and is now on the market!’ That is your cue to bid, not before.
Bidding before this point is pointless – you are only driving the price up at a time when the property is not even for sale. If the property fails to reach the reserve and is passed in, this is not necessarily a bad thing. It just means that the tables are turned in your favour for post-auction negotiations.
7. Have the Contract reviewed by a solicitor ahead of the auction. (And make sure they don’t charge you a thing to do it!)
This is absolutely critical. When you buy a property at auction, you will be required to sign the Contract there and then, and you are not afforded the statutory 5-day cooling off period that buyers of a property under private treaty are entitled to.
If you find a home you love, consult a lawyer. They will advise you of your obligations under the Contract – many obligations the agent will not even be aware of.
Tell your lawyer the conditions or terms you want included in the Contract (such as a lower deposit). Your lawyer will negotiate these terms with the vendor’s lawyer and any necessary amendments to the Contract are agreed prior to auction, not afterwards.
Don’t attempt to buy a property at auction without first getting advice. It could save you hundreds, if not thousands of dollars, to have a lawyer involved from the outset.
Luckily, at Mothers in Law Lawyers, we will review your Contract for FREE and provide you with detailed advice before you head off to auction.
Call Kylie at our Central Coast office today on (02) 4384 3710 to get the process underway.
Mothers in Law Lawyers (Central Coast)
Tel: 4384 3710
Mob: 0422 327 477
10 October 2014
Mothers in Law Lawyers (Central Coast) provides fixed fee conveyancing to all areas of the Central Coast including Avoca Beach, Berkley Vale, Bateau Bay, Bensville, Berkeley Vale, Budgewoi, Buff Point, Calga, Charmhaven, Chittaway Bay, Copacabana, Davistown, Doyalson, Empire Bay, Ettalong, Erina, Forresters Beach, Gosford, Green Point, Halekulani, Holgate, Kariong, Kincumber, Killarney Vale, Killcare, Koolewong, Lake Haven, Lisarow, MacMasters Beach, Matcham, Mooney Mooney, Narara, Niagara Park, North Avoca, Ourimbah, Patonga, Point Claire, San Remo, Saratoga, Springfield, Terrigal, The Entrance, Toukley, Tuggerah, Umina, Wamberal, Woy Woy, Wyoming and Wyong.