I'm investigating a property at the moment that is to be auctioned. I'm trying to figure out all the things I need to do leading up to the auction (assuming i decide the property's worth buying) and thought I'd run the list over the more experienced minds here (this will be my 1st property purchase if i get it). Thanks for any help you can give
I'm currently sorting out preapproval for the loan, which I don't think i'll have problems with. I've contacted both RAMS and Aussie about it and am intending to seek preapproval with both and then pick the best one. Limited timeframe until auction so i can't really wait for a response from one before going to the other – any problems with seeking approval through both at once?
I know i need to get building and pest inspections. What about site surveys? Or any other kinds of inspection? I have a conveyancing company in mind that i know of since i keep driving past them. They offer to take care of various inspection services, but i also asked the agent to give me the name of someone to do the building inspection.
Auction day – i believe that if i hold the winning bid i need to put down a deposit on the day. Is this the case? I'm not in the habit of wandering around with thousands of dollars cash, so i'd planned on having a suitable amount in a bank cheque. Is this typical of how others do this? I'm meeting the agent tomorrow and had intended to ask him about this, but thought I should ping the forum about this.
Is there anything else i should do before i make a bid, or immediately after? This is a residential IP (free standing home on single title), i won't be living in it to get FHOG. Sorry if these questions have been asked before. I didn't find a similar thread in this forum, not even linked in the sticky thread of most useful posts.
Else wrote:but i also asked the agent to give me the name of someone to do the building inspection.Agents are not allowed to refer building inspectors to prospective purchasers, from an ethical point of view. Get your own independent person in you don't know what types of deals they have with agents. I have had a building inspector once give me a whole bunch of business cards while doing an inspection for a purchaser and telling me that they will give this one a favourable report if I agreed to give out his cards to other purchasers!
Obviously I put the cards in the bin and would not recommend him to anyone but this kind of thing goes on all the time.
A comparative market anaysis of houses in the area are also good to have before an inspection. Know what the house is valued at and don't bid anything beyond that!
For Building Inspectors, try ringing Archicentre, or do a google search for building inspectors in your area, or find a few in the white pages and ring them.
Keep in mind that these guys are ususally busy and might not get to do your inspection for several days.Also, get a copy of the Section 32 (or Contract of Sale) and take it to the Solicitor to go over before hand.
Don't make a bid until the auctioneer is about to call "3rd and final call" for the first time. Usually they go in to consult with the Vendors at this point, then they come out and continue. Don't be afraid to call out whatever increments you want in the bidding. Agents don't like it, but you are allowed to do it.
Go to as many auctions as you can before the day to see what goes on.
Be aware of dummy bidders who will bid continually up to around the reserve price, then suddenly drop out without any warning.
Finally, if you really want the property, and can afford the price, and you know the value is right, make a good offer before the auction day. Some Vendors will be happy with this and accept your offer, others think that their property is in demand and hold out for the auction in hope of a better result.
Xenia & Marc,
Thanks for the advice. Regarding building inspectors I'd considered the conflict of interest. Yes i'll find one myself then. I don't think dummy bidders are very likely as the vendor is local government in this case. I'm still in the process of doing due diligence to figure out what it's actually worth and if i can make money from it. The agent's already told me they always sell these (government) properties at auction. I'll ask for a copy of the contract of sale today. Thanks again.
Hi Else,
Marc's advice here – Don't make a bid until the auctioneer is about to call "3rd and final call" for the first time. is very sound and a ploy used by many experienced bidders. The Buyers thought process on this method is that, If I don't bid, I will not help push the price up by showing that I'm interested and i'll buy it cheaper in the end.
Perhaps there may be some truth in this but at the end of the day and in most cases the Agent will have a fair idea of where the Property sits in relation to public opinion of value and will have advised the Vendor of such and hopefully the Vendor will have set the Reserve at around this figure. So buying so called cheap usually does not happen.My suggestion to you would be to look at other comparable properties that have sold (Ask the agent to produce a list), work out what you believe is a fair price for the property and only bid to that amount. If the property sells for more that you decide, then someone else saw more value than you did and you will have to keep looking.
Most Auctions require 10% purchase price for deposit and if you do not have this figure, I suggest that you talk to the Agent prior to the Auction to see if the Vendor is prepared to accept a lesser value. (note: This value would have to be substantial, at least 5% ). The deposit may be paid by way of personal cheque.
As to Building Inspections. The comments made by Adprop – Agents are not allowed to refer building inspectors to prospective purchasers, from an ethical point of view. Get your own independent person in you don't know what types of deals they have with agents. I am not sure if the way this reads is the way they mean, but it is not illegal for an agent to refer a Purchaser to a Building Inspector and I must say that it annoys me to hear such crap as Agents having deals with Inspectors. How stupid a comment. Not only would both our Licences be worth more than the one sale but the litigation that would follow is just not worth thinking about. If there is something wrong with the property the Inspector has a duty to report the problem – his future livelyhood is on the line. I will however offer some advice here. If the property is 100 years old, do not expect it to be 100% perfect. When or If there is a problem, I believe that the Inspector has a duty to impart that infromation in concise and tradesman like manner, not scare the pants of the prospective Purchaser.
Jon
Next time you consider auctioning one of your properties think about how scared Else. Luckily Else will show up on the day. many buyers wont. Sure they got to do all the work ahead of time but many are put off. It's a personal choice though.
Good comment from Jon regarding condition as per the age of the property, and worth keeping in mind when making offers.
We bought one of our past PPoR's with a building inspection done. The house was built in 1926; an authentic, period Californian Bungalow – beautiful. Even had the plate rails and wood panelling down the hallway, but hadn't been renoed for several years. On the surface, it looked good.
The report came back with a few defects – all relatively minor, but the guttering was not good, and the inspector (from Archicentre) said that given it's age, the property was in good condition. Before he said that, as I was reading the report, I was thinking; "my God, the house is a wreck!"
Since then, we have always had reports done, and I make a point of having a discussion with the inspector to get his comments and make an informed decision. If the building is not in "fair and resonable condition" relevent to it's age, we make an offer with a discount to cover the repairs and our reasons for the request, or for the Vendor to do the repairs before settlement.
Most Vendors will opt for the discount, or simply refuse; not many will actually do the repairs for you; they just want to sell the place and move on.
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