Buying a property at auction is a common way to purchase a house – however, when the hammer falls and you are the winning bidder, you are contractually obligated to complete the purchase pursuant to the auction contract terms and conditions.
It is very important to understand the auction process when buying a house at auction – we recommend that you:
- have a loan pre-approval from your broker or bank, this means you can bid with confidence.
- ensure that you have made arrangements with the seller or the agent to pay a particular deposit sum on the day – in the ACT, an Annexure B (partial deposit clause) can be included in the contract (5% of the purchase price, or less than 5% of the purchase price can be agreed with the seller before the auction).
- receive legal advice on the Contract for Sale prior to bidding, this will give you comfort the contract sets out if anything is substantial wrong with the house – in the ACT, it is not uncommon for unapproved structures to exist on the land, it is important to make sure they can be approved before you bid.
- don’t bid too much! there’s another house selling next week.
Eastwoods Legal can provide pre-auction advice on your possible auction purchase – simply email your enquiry to: firstname.lastname@example.org or send us an online enquiry and we will contact you to discuss the auction contract and auction process