Notes On Buying at Auction

DO I HAVE TO BE IN A CASH POSITION?

The straight answer to this question is yes !

To bid at Auction you need to be bidding in cash. 10% is only required on the day of the Auction, balance is due on the possession date.

As per paragraph explained below, you may talk to the auctioneer about extending the possession date and giving you longer to arrange money. Also with an Auction you may have a lead up period of up to 5 weeks that also should allow you to get into a cash position.

HOW DO I WORK OUT THE PRICE?

The Auction system allows you, the market, to firstly appreciate the house and then determine the price. We find as marketers, that some people literally become experts in a particular price range and they are able to indicate pretty well exactly what a home is worth. They do this by drawing on the experience of the homes they have looked at in that particular price bracket. If you need help with a guide to the price, ask the salesperson for guidance. Whilst you will not get actual figures, a salesperson will refer you to homes of similar price, or in a similar bracket that we believe indicate a reasonable price for the Auction home. You may also decide to get a valuation.

You should see it as an opportunity to buy at market value as the fact that the vendor is auctioning his property means they are relatively keen to sell.

SHOULD I MAKE AN OFFER BEFORE THE AUCTION DAY?

The modern Auction system allows for the property to be sold before Auction if the marketing contains the words “For Sale By Auction or Prior Agreement”. If this is placed on the advertisement it means the vendor will entertain an offer at any stage prior to the Auction day. You should not hesitate to do so if you wish to get the property off the market.

Once again there is an opportunity here, especially if you are in a cash position to own the home without having to outbid others on auction day.

WHAT ARE THE NORMAL CONDITIONS I WOULD BUY UNDER?

• 10% of the purchase price is required to be paid on the Auction day if you are the successful bidder. That is; you need your cheque book and the ability to have a balance in your account to cover the deposit once it is banked.
• It is considered if you bid at Auction that you have bid unconditionally and for cash i.e. if your bid is successful, you have bought the home. There is no subject to finance, subject to house sale, you have bought the house. There is nothing to be wary of so long as you have done your homework and have sought the correct advice along the way. This is no different from making a cash offer on a normal sale and purchase agreement form.
• Possession date is as per the Particulars and Conditions of sale, and is normally one month after the Auction day.
• Chattels are normally mentioned in the Particulars and Conditions and you look for them and make sure they tie in with exactly what you believe is being left in the house.
• GST will also be mentioned in the Particulars and Conditions of auction and you should check that this tallies with what you believe. Note that on residential homes there is normally no GST payable.

WHAT ARE THE PARTICULARS AND CONDITIONS?

This is the equivalent of a contract that you will sign if you are the successful bidder on the day. That is simply a contract that spells out the conditions you have bought the home on, see above, and binds you to the purchase of the home. It also binds the seller to sell to you as per the Auction bidding.

The Particulars and Conditions are normally available within 10 days of the Auction and you should get a hold of a copy and if you have any doubts on wording, clauses included, then you should consult the salesperson concerned, or your Solicitor.

Note that if you buy before Auction or after the Auction you will probably use the normal Sale and Purchase Agreement that has been designed by the Auckland Law Society and the Real Estate Institute. It is only on bidding at Auction that you will be buying under the Particulars and Conditions of Auction.

CAN THESE BE ALTERED IN SPECIAL CIRCUMSTANCES, SAY A LONGER POSSESSION?

All of the above conditions apply on Auction day as they are covered by the Auctioneer. If there are any of these conditions that you wish varied, i.e. you can only pay 6% deposit, you wish for a longer possession date, some of the chattels don’t seem right to you, discuss this with the sales consultant who introduced you to the property and he in turn will talk to the Auctioneer for you.

It is not unreasonable for the Auctioneer to come and talk to you prior to the Auction and get a clear understanding of what you want. If for example, you require a 3 month possession instead of 1 month, he would relay this to the owner of the home and if it was acceptable you would be told that you can bid with that longer possession date being accomodated for by the vendor.

Do not hesitate to talk about any Particulars and Conditions that you would like altered to put you in a position to buy.

WHY DO I HAVE TO PAY AND WHEN IS IT PAYABLE?

The following dates are important whether buying before Auction, at Auction, or after.

If you buy in a cash position these are the dates that you should note.

• The date of the contract or on the Auction Particulars and Conditions of Sale, as signed
• On the day, is the date that the contract was made.
• On that day a deposit of 10% or the deposit that has been agreed upon, is due to be paid there and then.
• The possession date. This is the day you take over the property. It is also the day that the balance of the money, i.e. the purchase price less the deposit already paid, is due. It is worth noting that this may be one month, two months, or three months after you have bought the property.

IN SUMMARY

Overall, to buy at Auction can be an exiting and worthwhile opportunity. Many of the nicest homes in the market come up for sale by Auction and you should not automatically discount yourself from purchasing them. If you have a home to sell or you are not in a cash position you should discuss this with the sales consultant concerned and see what can be done.

Because the vendor is Auctioning his home, he is normally "motivated" to find a buyer. If you can get yourself in a cash position by seeking advice correctly from lawyers, bankers, and your real estate consultant you may put yourself "ahead" of anyone who cannot do that. This would mean you have an opportunity to buy when others may not.

Instead of seeing the Auction as a daunting affair, we suggest you see it as an opportunity to purchase the home you want at a reasonable price.

Don't forget that both the seller and the real estate company you are dealing with are keen to "sell" that home either before Auction, on the day, or as soon as possible after the Auction.

Overall, we wish you the very best of luck and please do not hesitate to contact us with any questions about buying at auction.

COMPLAINTS AND DISPUTE RESOLUTION PROCEDURES

Introduction
All licensed real estate agents are required to have a written in-house complaints and dispute resolution procedure. That procedure is set out below.

You do not have to use our complaints and resolution procedure. You may make a complaint directly to the Real Estate Agents Authority at any time. You can make a complaint to the Real Estate Agents Authority even if you choose to also use our procedures.

In-house Complaints and dispute Resolution Procedures
Our complaints and dispute resolution procedures are designed to provide a simple and personalized process for resolving and complaint you might have about the service you have received from our agency.
• STEP 1: Call us and speak to the owner / manager: Judd de la Roche, on 0275 367 400 or office 03 489 4455 or Email: Judd@livingcorporation.com. Tell the manager who you are complaining about and what your concerns are. Let the manager know what you would like done about your complaint.

• STEP 2: The manager may ask you to put your complaint in writing so that he can investigate it. The manager will need a brief period of time to talk to the team members involved. We promise to come back to you within 10 working days with a response to your complaint. That response may be in writing. As part of that response we might ask you to meet with members of our team to discuss the complaint and try to agree a resolution.

• STEP 3: If we are unable to come to an agreed resolution after a meeting, or if you don’t wish to meet with us, then we will provide you with a written proposal to resolve your complaint.

• STEP 4: If you do not accept our proposal please try and advise us in writing within 5 working days. You can, of course, suggest another way of resolving your complaint.

• STEP 5: If we accept your preferred resolution we will attempt to implement that resolution as soon as possible. If we decline your preferred resolution we may invite you to mediate the dispute.

• STEP 6: If we agree to mediate the complaint but don’t settle the complaint at mediation, or we do not agree to mediate the dispute then that will be the end of our process.

REMEMBER
You can still make a complaint to the Real Estate Agents Authority in the first instance, and even if you use these procedures you can still make a complaint to the Real Estate Agents Authority at any time.

The Real Estate Agents Authority
c/- PO Box 25-371
Wellington 6146
New Zealand

Phone 0800 for REAA or 0800 367 7322
 

Please click the following link to view details of the Real Estate Agent Act's Code Of Professional Conduct And Client Care

www.reaa.govt.nz/page/code-professional-conduct-and-client-care

Please click the following link for information regarding making a complaint directly to The Real Estate Agents Authority (REAA)

www.reaa.govt.nz/page/information/guide-consumers/complaints/complaints