Going Once, Going Twice, Sold
When a property is purchased at Auction there is no cooling off period and both the vendor and purchaser are required to sign a binding contract. Copies of the contract will be available before auction day and at the auction, for buyers to inspect and get legal advice if they require.
All pest and building inspections and checks need to be done before the auction date, along with formal finance approval being granted. Usually on the day of the auction the property may be open for inspections for you to take a final look and consider if it’s the right property for you.
Auctioning A Property – What Happens?
Before auctioning a property around Port Macquarie, the seller will nominate a reserve price that they’re comfortable with, which is usually not advertised to the public. If the bidding goes beyond this reserve price then the property is sold at the fall of the hammer. When a buyer has successfully made the highest bid and the property is sold “under the hammer” they are required to pay the deposit and sign the contract. Both parties are immediately bound to this contract when the Auctioneer declares the property as sold.
If a property is sold on the same day as the auction and contracts signed and exchanged, the buyer still does not have the benefit of a cooling off period. However, if all the contracts are not exchanged until a particular day after the auction, then the cooling off rights will then apply.
Understanding Your Obligations as a Successful Bidder at Auction
In Australia, when you place the winning bid at a property auction, you are legally bound to proceed with the purchase. This means you must be prepared to immediately exchange contracts and pay the required deposit, typically 10% of the purchase price, unless otherwise agreed.
As mentioned earlier, auctions do not include a cooling-off period, meaning you cannot change your mind or withdraw from the sale without financial and legal consequences. If you fail to complete the purchase, you may forfeit your deposit and may also be held liable for any additional losses the vendor might incur, such as the cost of re-listing the property, marketing expenses or any difference if the property sells for a lower price in a subsequent sale.
To avoid complications like this, ensure you have your finance pre-approved, conduct all necessary due diligence (including building and pest inspections) and review the contract with your solicitor or conveyancer before auction day. Being well-prepared will help you confidently bid, knowing you can fulfill your legal obligations if you win!
More Information
More information can be found by clicking the following link – Buying a property at auction
