All Topics / General Property / Auction Question

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  • Profile photo of WiNmaKlInWiNmaKlIn
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    @winmaklin
    Join Date: 2009
    Post Count: 7

    Hello. I am soon going to an auction in Sydney for the purpose of bidding on a house. The auction is on a Saturday. My understanding is that if successful, I will have to pay the 10% straight up. Now my problem is 'How do I pay the 10% if I don't know what that is going to be?' And being a weekend, my bank will not be open. I am also going to ask the realestate agent this but I wanted your opinions (experiences) also. Another question I will ask him is 'How long before the auction do I have before I register as a bidder?' Also, if you could please share any other financial experiences regarding buying at an auction. Thanks for your input.

    Profile photo of LinarLinar
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    @linar
    Join Date: 2004
    Post Count: 567

    Because the market is slow at the moment, it may be worthwhile asking whether you can buy under non-auction conditions, that is, put down a smaller deposit, have it subject to various conditions such as finance, building etc.

    The agent can only say no.

    cheers

    K

    Profile photo of ducksterduckster
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    @duckster
    Join Date: 2004
    Post Count: 1,674

    Usually it is a good idea to prepare before going to an auction. By having previously approached a lender to find out what is the maximum amount is they can borrow from a lender. This way they know what is the maximum they can bid  and what the maximum the deposit will be.

    I know I am stating the absolute obvious but you do not want to risk getting into a position where the hammer comes down and you have purchased a house and then you find you can't borrow the amount you won the bid at.

    Profile photo of craigsedcraigsed
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    @craigsed
    Join Date: 2004
    Post Count: 37

    I think the question is, how do you physically pay a deposit on hammer fall when you do not know how much the winning bid is going to be? You can't get a blank bank cheque….. Do they take a personal cheque? Didn't think so….

    Thanks for the question WiNmaKlIn, it's something I have pondered on once or twice, but never sought out an answer to….. Looking forward to finding out how an auction works!

    Craig.

    Profile photo of RenovataRenovata
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    @renovata
    Join Date: 2009
    Post Count: 11

    I have only bought one property at auction and I wrote a personal cheque afterwards. There aren't too many other options. No one is going to have that sort of cash on them and, as previously stated a bank cheque is not an option. I also found that if you have a quick chat with the agent before the auction a lot of them will accept a 5% deposit. It doesn't hurt to ask.

    Profile photo of IP FreelyIP Freely
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    @ip-freely
    Join Date: 2008
    Post Count: 353
    craigsed wrote:
    I think the question is, how do you physically pay a deposit on hammer fall when you do not know how much the winning bid is going to be? You can't get a blank bank cheque….. Do they take a personal cheque? Didn't think so….

    Craig.

    In the corporate world, buyers come to the auction with a cheque in hand ie they know their limits. If the auction exceeds their predetermined level (ie needs more deposit than they have authorised on the cheque), they walk away. I have seen many cheques often  for tens (and even) hundreds of thousands of dollars above the required deposit. It gives you an indication that the buyer was prepared to pay more had there been more competition at the auction.

    With regards to when you can register for an auction – anytime up to the drop of the hammer, then it is too late! However, I'd prefer someone to register before bidding opens (even a day or two before auction if it will be a phone bidder).

    Profile photo of WiNmaKlInWiNmaKlIn
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    @winmaklin
    Join Date: 2009
    Post Count: 7

    Thanks Guys. Yes, I think I'll have to get a chequebook in order to pay them the 10% on the day (hope that works but will confirm proir). And thanks for the info about registering (upto auction time). Wish me luck as there is a lot of interest in this particular house. Is there a more auction info thread here, I did a search but it didn't appear to be so. I did find an interesting thread entitled "stupid auctions" which was interesting. I wish to be as informed as possible about auctions before I go.
    Cheers

    Profile photo of harbharb
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    @harb
    Join Date: 2006
    Post Count: 324

    Or you can give them a couple of thousand cash and pay the balance on Monday with a bank cheque.  Just give the agent a call beforehand to make sure he'll agree but can't see why he wouldn't take even $1000 over a 10% personal cheque.

    Profile photo of wildrahilwildrahil
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    @wildrahil
    Join Date: 2009
    Post Count: 9

    i bought ahouse at auction  2 yrs ago .asked agent whether 5% deposit ok.  he said yes . isaid   about paying on the saturday  and he said dont worry  just sign the contract and its not a problem going to get a bank cheque on monday which i did ..house was on the cheaper price range of 240k.   dont know whether this is common or not…always thought for a weird joke i mite bid and buy a house at auction and when everyone left say sorry dont wont it and havent got any money  to buy it anyway … i dont think there is much they can do about it except get upset about it … cant get blood out of a stone

    Profile photo of SAS BuildingSAS Building
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    @sas-building
    Join Date: 2009
    Post Count: 25

    Hi WiNmaKlIn,
    I have often got away with a personal cheque and thought this was normal practice as i have never been refused by an agent. On one occasion I handed over a personal cheque and asked the agent not to bank it for four days, then managed to transfer some funds so it would clear. You can register to be a bidder minutes before the auction starts, you just need your drivers license (ID) or a signed letter from the person on who’s behalf you are bidding,
    Hope this helps and good luck.

    Profile photo of WiNmaKlInWiNmaKlIn
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    @winmaklin
    Join Date: 2009
    Post Count: 7

    Thanks guys
    I went to a few auctions last saturday to 'get a feel for it' and one thing I noticed was that the realestate agents approach the bidders and hassle them to try to get them to increase their bid. This seems unethical to me. My fiance said that if they approach us she will tell them to go away and then use stronger language after that. Bless her heart. !o! Wish me luck this saturday. Also it seems prudent to not offer the first bid and wait till the bidding slows down then go for it (as long as it's still under your maximum at that point).

    Profile photo of suavemechanicsuavemechanic
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    @suavemechanic
    Join Date: 2004
    Post Count: 106

    so how did you go ?

    Profile photo of WiNmaKlInWiNmaKlIn
    Member
    @winmaklin
    Join Date: 2009
    Post Count: 7
    suavemechanic wrote:
    so how did you go ?

    No good I'm afraid. I made one bid after a pause in the bidding but it ended up shooting past our limit (470k) and ended up selling for 501k. I was a lot more nervous than I thought I'd be, but I know that if I ever bid again, I wouldn't be so nervous. An asian guy and a lebanese couple fought each other at the end with the asian winning out at 501k. My fiance is reluctant to go to any more auctions now as we spent money on building inspection, but at least we didn't waste money on pest report, survey report and final bank loan approval (low risk because we have a more than reasonable deposit) which would have cost us a lot more. My tip on bidding is to wait until the hammer is about to fall, then go in for the kill. But it didn't work for us because two others had more in the tank than us in the end. We are now looking at buying a house or maybe townhouse in Belmore area (roughly) Sydney (non-auction). The auction was in Belmore also. I don't really think too much of the area but my fiance wants to be as close as affordable to the inner west and still have good transport options.

    Profile photo of suavemechanicsuavemechanic
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    @suavemechanic
    Join Date: 2004
    Post Count: 106

    sydney is tough like that ,there is always some one who would rather pay more and get it over with than keep looking ,and they seem to have a lot more gas in the tank !
    we bought our most recent fix up at auction and it was a good experience.
    we asked before if 5 % would be ok as it was all we had,and after walking away about 5 paces they agreed
    i ignored the agent in my face and in the end it was me and a developer in a porsche….
    he did a wonderful job of slowing things down
    so pretty soon we were bidding in thousands
    he had a fixed price in his head,and i only had to go two grand over that (which was about 20 grand less than my fixed price ! )the family kicked in and tidied the place up tennants were in 2 weeks later
    wish i could do this all the time !
    good luck

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