BUYING AT AUCTION:
The most important thing to remember is that under the Auction system, when you buy a property, there is no cooling off period as there is when you buy ‘for sale’. The Auction sale is legally binding on the day.
*** These guidelines should help you with understanding the Auction process ***
1. Do your Research
When you are looking in an area, whether buying ‘for sale’ or through an Auction, research the prices in that area for the type of property that you want.
Find out about the good and bad features of the area, and comparative prices to other areas.
Look at similar properties to the type that you are seeking.
2.Attend Local Auctions
It is valuable experience to attend as many local Auctions as you can to see how the Auction proceeds. Observe how people bid, and who is at the Auction. Work out people’s style of bidding. The same people may be bidding against you for your property in the near future.
3.Arrange your Finances
Ensure that you have your Finance in place prior to the Auction. Establish you bidding limit. Make sure you allow for all extra costs, example : legal, stamp duty, finance fees etc.
WHEN YOU HAVE DECIDED ON THE PROPERTY:
1. Register your Intent with the Agent
Advise the Real Estate Agent if you are interested in a property. They will advise you if the Vendor would consider sale prior to Auction, and whether any offers have been received prior to the Auction Day.
2.Establish your Bidding Limit
It is important that you set your own bidding limit. Decide what the property is worth to you based on what you can afford. To make sure you can afford a property work out the limit on your loan and add 3% to the interest rate. If you could still make the
payment then that is a very safe limit.
3.Set an Uneven Limit
Wherever possible, it pays to set an uneven limit, rather than stopping on a round number. For example, rather than stopping at 410,000, try going to 411,000. A small $500 bid could make the difference if the other bidder is close to their limit.
4.Check the Paperwork
If you are seriously interested in a property and intend to bid you should have your Solicitor inspect the Contract of Sale. It is a good idea to have a good read through all the paperwork related to the Auction beforehand.
Wherever possible, contact the Agent handling the sale and ask them to provide you with a copy of the documentation. This is normally possible in the week prior to Auction.
Read through all of the documents and always ask if you are unsure of anything. It is important to clarify details such as settlement terms, deposit and fixtures before the auction commences.
Get building and pest inspections done before the auction. It is not possible to make an Auction purchase conditional on inspection results. Make sure that any reports or inspections have been carried out to your satisfaction before you attend the Auction.
6.Ask for Help
Many people find the Auction process daunting. Don’t be afraid to ask a friend, relative or Real Estate Agent to assist you with your bidding.
Many people ask someone else to bid on their behalf as they may be less inclined to bid emotionally and will not exceed a predetermined limit. Make certain that they have very clear instructions in writing on what they can and can’t do on your behalf – remember, there is no cooling off period with an Auction.
ON AUCTION DAY:
1.Presentation is Important
If you look like an affluent, confident property buyer, this will help convince your competition that you won’t stop until the property is yours.
Remember that it isn’t always the person with the most money that wins at auction. It is the person who convinces everyone else to stop bidding.
2.Check the Contract of Sale again
On the Auction Day you should always check that your copy of the Contract of Sale is exactly the same as the original Auction Contract and that there have been no late changes.
Remember how an Auction looks from the Auctioneer’s perspective. They are often looking at a large number of people who are invariably turning around, whispering etc.
If you are standing at the back of this scene, or hidden in the shade of a tree, the Auctioneer may well miss your bid, particularly when you are bidding for the first time. Stand in clear sight of the Auctioneer and make your first bid obvious to them.
Make sure the Auctioneer understands what you are doing. Bid early, clearly and confidently, and avoid unusual sign language that may be misunderstood.
4.Keep Control of your Bidding
If the bidding is increasing in larger denominations than you are comfortable with, consider offering a lower denomination as your bid. The Auctioneer does have the right to refuse it, but there is absolutely no harm in trying.
It is important not to be drawn into a bidding war on a property you want. Emotion can lead to you paying more than you can afford and there is no cooling off period with an Auction.
5.Making a Deposit
When the property is sold at the Auction you are required to sign the Contract of Sale and pay a deposit of usually 10% or 5% on the spot. This can be paid by Personal or Bank Draft or subject to prior approval with the Agent by Deposit Guarantee.
6.Don’t be upset, if you lose the bid:
The streets are full of them and there are plenty of opportunities or auctions out there
Don’t forget to claim back the 10% or 5% deposit that you have submitted
GUIDE TO BID AT PROPERTY AUCTION SALE
1. WHO MAY BID
– Intending Purchaser who possess a Bank Draft/Banker’s Cheque be equal to 5% or 10% (whichever applicable) of the Reserve Price is qualified to become a bidder.
– Qualified bidder may delegate another to act as an agent or representative in his behalf. The delegate is required to submit a Letter of Authority and NRIC card photocopy of the intending purchaser .
2. WHAT TO PRODUCE AT THE AUCTION.
– Bring along the NRIC card to qualify to bid and present it for identification and registration.
– Important to submit Bank Draft/Banker’s Cheque amounting 5% or 10% (whichever applicable) of the Reserve Price.
– Do bring extra fund as Additional Deposit to subsidize if there is increment on the Reserve Price.
– Specify your details required in the Bidder’s Registration Form.
3. WHAT TO NOTE AT THE AUCTION.
– Always check the specific amount requested and the Bank Drafts/Banker’s Cheque are correctly payable.
– Certainly do not bring personal or company cheques as Auction deposits.
– To be present earlier to avoid disappointment.
– It is important to listen to the Auction proceeding very carefully to avoid unawareness.
– Observe the details provided are correct in the Contract of Sale before endorsement.
– Necessary to switch off or vibrate all your cell phones to avoid interruption during auction.
4. NECESSARY DOCUMENTS FOR BIDDING.
For an individual bidder:-
– a photocopy of his / her NRIC card (both sides)
– correspondence address
– telephone contact no.
For a Corporation:-
– a certified true copy of the Company’s Memorandum and Articles of Association.
– Form 24 and 49
– Board of Directors’ Resolution
For Agent/ Representative
– Letter of Authority from the Intending Purchaser
– a photocopy of the NRIC card (both sides)
5. HOMEWORK TO DO BEFORE ATTENDANCE AT AUCTION.
– Obtain the Proclamation, Conditions and Terms of Sale from the Auctioneer.
– Make necessary enquiries and confirm essential documents to be furnish for participation.
– Final check out with Auctioneer before turning up for auction.