Be Prepared for Auction

In order to obtain the highest price for a property and capitalise on increased demand we have noticed an increase in the number of properties going to auction.

An auction presents a different set of legal risks which potential buyer's need to be aware of.

Most people do not know, especially First Home Buyers, that immediately following an Auction the successful bidder is required to sign the contract for sale and to pay the deposit immediately.

Once a successful purchaser has signed and exchanged contracts there is a legally binding agreement that you must follow through with the purchase.

After this you are not able to obtain any and rely on reports, such as pest/building or survey reports, or to obtain legal advice as to the terms of the contract after exchange. As a result, you lose the ability to amend or vary the contract.

Therefore, obtaining legal advice in respect of the terms of the contract for sale prior to auction is critical.

It is also important that at the time of the auction you have your finances in order, so that after entering the contract you can follow through with the purchase.

If you do not "complete" the transaction due to lack of finance, you will forfeit your deposit, be required to pay penalty interest and if the vendor is unable to sell the property again for the price you agreed to pay, you will pay to the vendor any loss they suffer as a result.

Therefore, in the event you are considering attending an auction we recommend that you obtain legal advice in respect of the contract, obtain any reports you consider necessary on the property (pest and building) and ensure that your finance is in order to avoid any potential risks.

This article does not constitute legal advice and provides general information only.

“Liability limited by a Scheme approved under the Professional Standards Legislation. This article does not constitute legal advice and provides general information only.”