Buying a property can be stressful at the best of times but buying a property at auction can often multiply the stress as it takes the control of the process away from you as the buyer, and leaves you with an inflexible timetable. Added to that is the uncertainty about what you do not know about the property and the process. Here we will discuss the tips and traps to look out for when buying a property at auction.
In addition to the practical considerations set out on their page it is also imperative that you understand that if you are the successful bidder at auction you are bound to sign the contract and pay the deposit. Once you have been the successful bidder at auction you are bound to the contract that has been presented by the vendor, and it is too late to make variations to the contract at that point.
It is also too late to do most of your due diligence on the property after the auction.
Once you are bound to the contract you cannot get out of the purchase simply because you cannot obtain the finance to complete the purchase. If you do not pay the rest of the purchase price at settlement the vendor can generally forfeit the deposit, and may sue you for any shortfall they suffer on on-selling the property to someone else, as well as for their costs of doing so.
If is therefore critical that you make sure that you attend the auction prepared, having taken the following steps:
- Have the contract reviewed so you are aware of any inherent issues disclosed in it and have the terms of the contract negotiated, where possible, to give you the best outcome;
- Ensure you have carried out the necessary due diligence so you are comfortable that you are aware of the state of the property. That is generally done by way of building and pest inspections and strata inspections, although other inspections such as plumbing or electrical inspections can also be carried out;
- Ensure that if you need to obtain a loan to purchase the property that you have pre-approval by the auction date; and
- If you have any specific plans about what you wish to do with the property that you have discussed those with your conveyancer and also the Council (depending on the nature of your plans) to ensure that you can do what you are intending to do with the property.
Sutherland Shire Conveyancing can review the contract and negotiate amendments on your behalf, organise a building and pest inspection or strata inspection (as applicable), liaise with your lender to expedite an approval and advise you on anything in the contract that may affect your specific plans.
Please call Nadine on 9543 1818.
