Buying at an Auction

Buying at an Auction

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Purchasing property at auction is not like purchasing other types of property. The bidding process is open to the public, and if the hammer falls and you are the highest bidder, you must sign the contract immediately and pay the deposit on the spot (usually around 10 percent of the purchase price).
This means that you must be certain that you are bidding on a house that you can afford.

How does an auction work?

To participate in or bid at an auction, prospective buyers must first register with the vendor’s agent and be assigned a bidder number. The auctioneer is in charge of the bidding process. They accept bids from prospective buyers and monitor the current offer price.

Before an auction, the seller will set a reserve price, which is normally not published. If bidding exceeds the reserve price, the property is sold upon the drop of the hammer. If your bid is successful, you must sign the contract of sale and pay the deposit right away (usually around 10 percent of the purchase price).

If you bid at an auction, you must be prepared to exchange contracts and execute the transaction. Otherwise, you will forfeit your deposit and may be held accountable for the vendor’s damages.

Getting ready for an auction

Consider the following before bidding at an auction:

Instruct a solicitor to review the contract of sale on the property before the auction to ensure that all clauses are understood and there are no surprises. Also, you must get per-approval for funding before attending an auction.

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