I am on the market to purchase my first property, and I am freaking out about a possible opportunity that just came along.
Three 3 bed / 2 bath units are up for auction this Sunday. They are located in a highly sought after location. The units have been repossessed by the bank. There are a few other units up for sale in the same building for between 620K and 670K.
I went and inpected them yesterday and when the real estate asked me what my budget is, I smiled at him and said with a very small voice $300K. I think I even went red in my face. Anyway, he didn't say much and I left. Just 15 minutes ago he rang me and said, Nath I want you to put in a bid for 300K on Sunday. He said chances are very small you will get it, but if noone else put their hands up, I can guarantee you it's yours for 300K.
Now… I'm very new to the whole thing and I don't know what to think. Is this just a trick to get the auction going for him? Or could this be a genuine opportunity? Should I start the auction of, or should I wait and hope for them to get passed in and put in an offer after that if they haven't sold?
What are the catches of buying at an auction?
I have the money ready, but it is still sitting overseas and he said that would be able to work something out.
Please anybody… any advise would be very much appreciated.
ThanksJamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
If it sounds to good to be true it often is.
If the property is genuinely worth $600k plus then there's no reason why it would sell for half of its value. I'm sure the REA would have a long list of contacts interested in this property if that was the case.
With auctions – you need to exchange on the day and go through with the purchase. Therefore, you need to be confident that finance won't be an issue so a clean credit history, good serviceability, employment history, etc will go a long way.
Hope that helps.
JamiekramyllekParticipant@kramyllekJoin Date: 2012Post Count: 1
I'm relatively new to the area as well but when I have expressed an interest in a property for auction, I have always been rung before the auction with encouragement to the point of just asking me along anyway even when I have stated that I'm not interested. My reasoning for this would be that
1. It looks good for the realtor in front of the vendors that they've been doing their job.
2. The more people= increased chance of competition and offers.
Fingers crossed for you, sounds a bit ridicuous though!!
MarkScott No MatesParticipant@scott-no-matesJoin Date: 2005Post Count: 3,856
You might consider getting a buyer's agent to do some quick research and if necessary attend the auction to bid under your instructions – eg if you have a set limit give them an instruction up to 85-90% of that amount so you still have some leeway if the auction may swing your way.mattstaParticipant@mattstaJoin Date: 2011Post Count: 604
I agree that it's probably a trick to add you to the competition, so that it bumps up the price especially for others out there who are interested.
I don't think they have your interest in mind at all.
Tell us all how it goes for you
He'll work something out? haha. Why woul he tell a complete stranger about a deal that could prpfit someone hundreds of thousands of dollars.
You're dreaming!!! It looks better for them if there are a lot of people there (especially one that gets the auction started).
He can't work anything out.
I f you bid you MUST have 10% deposit WITH YOU. Do you have $30,000 for Sunday?
And a lot of bank repo's want 28 day settlement. Are you SURE you can get the remaining $290,000 (with stamp duty etc) in that time. If not there are penalties. Check the penalties on the contract. You may end up losing your $30,000.
Auctions aren't a good idea if you don't know the rules.ksherwellMember@ksherwellJoin Date: 2007Post Count: 125
It sounds very much like he is mustering his bids to show increased interest in the properties. However, having being involved in property repossessions for 2 major Australian banks, I have seen stranger things happen, especially when the bank is desperate to offload the property for accounting reasons. However, I doubt they will drop lower than any minimum reserve that they have established as this is the minimum they need to break even on the loan, otherwise it will be booked as a loss and this obviously has an adverse effect on their balance sheet. However, be mindful of the fact that at times banks are seeking to free up the bad debt provisions held on their balance sheets for accounting reasons. It’s a good idea to go to the auction and get as much experience as possible. In fact I’d suggest going to quite a few auctions to get a feel for the process before you reach the point of actively bidding for a property. As for your funds being held overseas is there any specific reason? If and when your ready to purchase you’ll need them at hand to settle on the property unless of course you have obtained short-term bridging finance.
Thanks for that. I'm originally from Belgium. My dad passed away in August last year and because I live overseas, the bank has blocked all accounts for up to 7 months (I know ridiculous). I have some money (enough for 10% deposit) sitting in an account they couldn't block, but the rest of the money is still blocked. It has been 6 months now, so hopefully it shouldn't be too much longer.
I will definitely go the auction on Sunday and cross my fingers the units won't go for 300K I think I will be sick if they do.
The guy who owned the units is a very high profile person. He owns many many properties (residential and commercial) and I'm not sure what went wrong here. I'm sure there's a good reason, but I'm also sure this whole thing doesn't worry him too much.
Anyway… I will keep you updated on how the auction went.
Nathvagirl2012Participant@vagirl2012Join Date: 2012Post Count: 47
I've enjoyed reading this post – also look forward to hearing how you go on Sunday!
Definitely a good idea to keep your hands in your pockets – but you've got to check it out… you never know!markh3084Participant@markh3084Join Date: 2010Post Count: 43
Its great to hear all the encouragement and advice you are getting. It does sound too good to be true, but definitely go along, you can learn a lot from watching auctions. I've been to a few lately where there are simply no bidders and you can learn from them too.
I don't fully understand the delay with getting your funds from overseas but if it's a probate issue, I wouldn't be committing to spending the money until it was actually in my account. If you enter into a contract to pay 290K and you are late, it's going to cost you (especially if the vendor is in financial trouble him/herself). You may have unexpected delays if it is a probate issue.
Please keep us updated, Did it sell? how much? How many punters showed up?
MarkScratchMember@scratchJoin Date: 2010Post Count: 81
how did it go? Was it a learning experience
Here how the auction went….
There were about 15 parties but only 4 that were bidding. All 3 appartments got bids, but they all ended up being passed in. 2 at 400K and the slightly bigger one at 430K. After the first highest bid of 370K the auctioneer got on the phone with the bank and came back putting in an offer on behalf of the vendor of 400K. Now, does that mean the reserve price was 400K and 430K respectively? If somebody would have put in a bid for 405K, would it have gone for that?
I'm really curious to know if they sold today. I will follow up with the real estate tomorrow.
No. The vendor is only allowed one vendor bid. If it was $370K it would be no use saying $500K. They put in the bid in the hope that someone (or the original bidder) will put in another bid higher than theirs.
You only know how low they'll go when they say SOLD!!
Please let us know. Or if you are not bidding yourself tell us the address and I can look it up on RPdata.
P.S. Sorry to hear about your dad.
AND- I LOVE Belgium (except that I put on heaps of weight while there). Damn those frites and mayonnaise.
Don't talk about frites, mayonnaise and chocolates Makes me homesick Where abouts did you go in Belgium?
I missed a call from the real estate guy about an hour ago. Very interested to see what he has to say. He knows exactly what my budget is, so why would he bother to ring, he knows I wouldn't be able to go up to 500K or 600K. Unless he's wanting to ask me on a date hahahaha…
Will keep you updated.
NathRichard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024
I am standing by waiting and have my fingers crossed for you.
Yours in Finance
We went to Brussels, Brugge and Ghent. LOVED Ghent the most. I could easily spend more time there. I'm off to Europe in April but East side. Next year we're going again with friends and they want to go to Belgium. May just have to go back for a quick visit.DerekMember@derekJoin Date: 2004Post Count: 3,544Nathalie74 wrote:Very interested to see what he has to say. He knows exactly what my budget is, so why would he bother to ring,
He would have found 'somethign else' in you rbudget range that will suit you perfectly.