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:
- Do I understand the market?
- What type of property am I buying?
- Is it safe for me to proceed with the purchase?
- What is my maximum buying price?
- Is this a property that I actually want and can afford?
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.
FAQs
Got questions? Find answers to some of the most commonly asked questions about our financial solutions, processes, and services to help you make informed decisions.
LMI is a third-party insurance premium payable by you as the borrower, to protect the lender against the potential loss of money if the borrower is unable to repay the home loan. Generally, an application with a Loan-to-Value Ratio (LVR) of 80% or more may result in the borrower having to pay Lender’s Mortgage Insurance.
Extra payment is an excellent feature of a good mortgage deal. Here, your lender lets you make lump-sum additional payments along with your regular monthly payment. Making extra payments allows you to shorten the length of time you are paying your mortgage. Since your balance is being paid off faster, you will also have fewer total payments to make, thus lowering your interest. At Reliiance Financial Solutions, we can help you find the most suitable mortgage deal for you. We have a range of lenders that allow you to make as many extra repayments as you want, whenever you want, without attracting any penalties.
Stamp Duty is a government tax imposed on contracts, with the amount usually calculated as a percentage of the contract value. In layman’s terms, it is the tax charged for your legal documents to be ‘stamped’.
If you are planning to buy a property, it’s crucial to factor your State’s Stamp Duty into your budget.Chances are, based on your circumstances and state of domicile, you might be able to obtain a stamp duty exemption, or concessions (discount) against the purchase of your first home. Stamp duty laws get changed often, so be sure to check your State Government’s website for the most up-to-date information.
Did you know that some lenders would allow you to cash out any extra repayment you made whenever you need the money? You read that right. This useful mortgage feature is called “redraw facility”. You can withdraw any extra repayments or lump sum payments you make over the life of the loan. At Reliiance Financial Solutions, we will explain all mortgage products to you, including those which allow you to the redraw option.
Testimonials
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Very few things come close to receiving their genuine appreciation of our services. All we can say in return is – the pleasure was all ours.
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