Daily Archives: May 9, 2020

Understanding Auction Terms

If you are new to the auction process, you may come across several terms that confuse you, which is the last thing you want in the middle of a bidding war. Here are some common terms to be aware of.

Make Sure You Understand the Terminology

If you are new to the auction process, you may come across several terms that confuse you, which is the last thing you want in the middle of a bidding war. Here are some common terms to be aware of.

Bidders Guide

The bidder’s guide is a document that must be provided to bidders by the selling agent before an auction. It gives information on how to register for auction and what paperwork needs to be filled out, the relevant privacy laws and the rules and regulations of the auction. Make sure to get one of these before you start to seriously plan out your bidding!

Inspection

Usually beginning about half an hour before an auction, the inspection period is important for anyone seriously considering getting in on a property at auction. It isn’t just a final chance to see the property up close, it is also an opportunity to get a final look at the relevant documents for the home, such as the terms of settlement – as Consumer Affairs Victoria (CAV) says, you won’t be able to change these if you win the auction.

Vendor & Dummy Bids

It’s important to understand the term vendor bid and the difference between it and dummy bids.

Vendor bids are a single bid or bids made by the auctioneer on behalf of the seller. The purpose of this bid is to help the property achieve its reserve price.

The auctioneer is entitled to bid once on behalf of the seller or in some states as many times as they like. If this bid is to be made during the auction, the arrangements for making the bid must be set out in the rule displayed before the auctions starts and the intention to make a bid should be announced by the auctioneer at the start of the auction.

A dummy bid on the other hand is a false bid made by a non-genuine buyer. All dummy bids are illegal and attract significant penalties for the vendor (up to $20,000 in SA and up to $55,000 in NSW), the dummy bidder and in some cases the agent if it can be proved they solicited the bid.

Rises and advances

This is the amount by which bids increase during an auction and is usually dictated by the auctioneer. They could be $500 or $5000, and do not necessarily have to be adhered to – but the auctioneer can reject your bid if they think you have not advanced the bidding by enough.

Reserve

One of the most crucial terms, the reserve is effectively the point at which the auction becomes “live”. If bidding does not go over the reserve then a negotiation by the highest bidder and seller may take place. This may continue for hours or days but usually a contract on the property is executed reasonable soon after the auction itself. However, once bidding goes over a reserve price the property is on the market and a winning bid is binding, so make sure you don’t over-extend your budget or get carried away in the heat of the moment. Sell my house in Frankfort

On The Market & Passed In

During the course of the auction, the auctioneer may stop the proceedings and say they are seeking advice or instruction from the vendor. This gives the auctioneer time to discuss the progress of bidding with the vendor.

If the bidding has reached the reserve price, or is close, the auctioneer will ask the seller if they are willing to adjust their reserve and sell the property for the highest price. If they are, the auctioneer will announce to the crowd that the property is on the market or rather that it will be sold to the highest bidder.

If the bidding does not reach the reserve price or a price the seller is happy with, the property may be passed in. In this case the highest bidder may be given the first opportunity to negotiate a sale with the seller however this is not legislation in most states.

Settling your real estate purchase

What You Need to Remember

Finally, it is time to settle the sale of the home you have purchased at auction. There are however many things you’ll need to organize between the time you sign the contract of sale and the settlement date.

During the settlement period, you will need to fulfil the conditions outlined in the contract of sale as well as any other obligations you have.

Finance

Before the settlement date rolls around, you will need to contact your mortgage lender and organise your finance for the home. Whether you’re closing a bridging loan, using a loan portability feature or taking out another mortgage, your finance needs to be organised as soon as possible.

The balance of the home is due on settlement day and will usually be paid to the seller once the lender has authorised the payment. Home buyers in Fresno

Conditions

If you outlined any special conditions in your contract of sale, now is the time to fulfil these. For instance, the sale of your home may be subject to an inspection, valuation or some type of work by the owner.

For a smooth transaction, this needs to be organised well in advance to ensure everything is completed by settlement day.

Handover

Once both parties and solicitors have written to the agent to confirm the sale has settled, the agent can organise the handover of the keys to the new owner.

This can take a couple of hours to be finalised, so it’s a good idea to organise your removalists to come to your home the day after settlement.

Moving On and Moving In

Congratulations! You have just purchased another home and are now on your way to becoming a seasoned real estate buyer.

Taking possession of your new home is an exciting time. Startingfresh in a brand new property and moving all of your furniture is sure to be a fun experience for everyone.

Moving in

Will you be moving your furniture in yourself, or will you hire removalists? You will need to organise this well in advance so you can start packing and have a smooth transition into your new home.

Get to know the neighborhood

As a new member of the neighbourhood, you may feel a little nervous about where the best amenities are and what your neighbours are like.

Take some time to explore your new suburb. Don’t be afraid to introduce yourself to your immediate neighbours next door or across the road.

Once you’ve met, they can provide you with some helpful information. For example, they might know the best hidden restaurants in the area or which road to take to avoid morning traffic.