Purchasing a property at auction can be both exciting and stressful. Once the hammer goes down at auction, the contracts are immediately binding on all parties. There are several steps and procedures involved to ensure that you are organised, you have completed your due diligence and you are ready to purchase. These important steps should be completed prior to attending an auction.
1. Have a licensed conveyancer or solicitor review the contract
It is essential to have a qualified professional thoroughly review the contract for the sale and purchase of land, all the prescribed documents and the special conditions attached to the contract. Your conveyancer or solicitor will read through the contract and advise you on all the contents. They will also liaise with the vendor’s solicitor or conveyancer to have some terms of the contract amended to suit you as a purchaser.
2. Arranging finance
Prior to auction purchasers should ensure that finance has been unconditionally approved. If the purchaser holds conditional approval prior to the auction, this may be dependant on things such as seeing an exchanged contract or completing a valuation. The purchaser should familiarise themselves with the potential risks of entering into a contract at auction with only conditional approval.
3. Obtaining pre purchase reports
An important pre auction check is ordering an independent building and pest report for the property. These reports will identify whether there are any pest infestations or defects. Many contracts generally have a special condition stating that the purchaser acknowledges that they accept the property in its state and condition on the day of exchange which is why it is important to be aware of any potential building issues prior to attending an auction.
If purchasing a strata title property, the purchaser should also obtain an independent strata report to uncover any issues relating to the building, common property, financial health of the owner’s corporation, strata by laws and levies.
4. Inspecting property
Purchasers should ensure when attending open home inspections, to thoroughly inspect the property, in particular, ensuring all inclusions are in working order as many contracts generally have a special condition stating that the purchaser acknowledges that they accept the property and any inclusions in their state and condition on the day of exchange.
Purchasers may also consider using the local council’s website development application tools to investigate whether there are any proposed or approved development applications surrounding the property.
5. Ensuring deposit funds are ready
When the purchaser’s final offer is accepted and the hammer goes down at auction, contracts are immediately binding on all parties. The agent will arrange for both parties to sign a contract for exchange, the deposit is also payable at this time.
Buying at auction can feel like a lot to manage on your own. There is a lot to check, and not much time to check it. That is where we come in. Our team can review the contract, explain what it means in plain terms, and help you feel confident and ready before you even raise your hand. If you have an auction coming up, get in touch. We will help take the stress out of the process so you can focus on the excitement of buying your next home.
This article is general information only and does not constitute legal advice. If you are buying a property, contact our office to arrange a consultation with our solicitors and conveyancers.
