Buying at Auction Part 8 - Your Bids Successful Now What?
If you emerged victorious in the bidding battles, and saw the price surpass the reserve, then congratulations - you have bought a property at auction. Here are the steps you need to understand so it all goes smoothly.
But sometimes a property does not sell, so here is what do you need to know when this happens.
We also look at what happens when a property passes in
What to do When Your Bid is Successful
If you emerged victorious in the bidding battles, and saw the price surpass the reserve, then congratulations - you have bought a property at auction!
Normally, immediately after the auction you will be required to sign the contract, and provide the 10 per cent deposit. This is why we want you to make sure your finances are in order - in Australia, there is no cooling-off period. Once you buy, you’re locked into the deal.
Once you have signed a contract it will be deemed that you have an equitable interest in the property and you should immediately take out insurance.
Settling the Sale - What You Need to Remember
There are many things you’ll need to organise between the time you sign the contract of sale and the settlement date.
During the settlement period, you will need to fulfil the conditions outlined in the contract of sale as well as any other obligations you have.
Before the settlement date rolls around, you will need to contact your mortgage lender and organise your finance for the home. Whether you’re closing a bridging loan, using a loan portability feature or taking out another mortgage, your finance needs to be organised as soon as possible.
The balance of the home is due on settlement day and will usually be paid to the seller once the lender has authorised the payment.
If you outlined any special conditions in your contract of sale, now is the time to fulfil these. For instance, the sale of your home may be subject to an inspection, valuation or some type of work by the owner. For a smooth transaction, this needs to be organised well in advance to ensure everything is completed by settlement day.
Once both parties and solicitors have written to the agent to confirm the sale has settled, the agent can organise the handover of the keys to the new owner.
This can take a couple of hours to be finalised, so it’s a good idea to organise your removalists to come to your home the day after settlement.
What Happens if a Property Passes In
Of course, not every auction has a happy ending under the hammer. Sometimes bidding doesn’t get above the reserve, whether because of a high price set by the seller or some cautious bidding on the buyers’ end. Sometimes, no-one has made a bid at all!
While this result may seem disappointing, it opens the door for you as a buyer to start or continue negotiations on the property. Vendors have usually become educated to the market during the process and can be more realistic with their expectations around price and conditions.
If you find yourself in this situation be aware that all other parties can now compete as well so avoid making unrealisticly low offers in the wake of a property not selling under the hammer.
Missed out on your dream property? Download our complete Buying at Auction Guide to give you all the tips and strategies you need for success.