Auctions are now becoming a more popular method of selling property. Purchasing a property through auction is a little different to purchasing through other methods and purchasers have a lot to consider.
Sales by auction are unconditional. Once the hammer falls and the agreement is signed, both the buyer and seller are legally obligated to complete the purchase.
Buyers considering purchasing a property at an auction should do their homework and conduct their own due diligence procedures beforehand. This may include the following:
Obtaining a LIM report;
Obtaining a building report; and
Asking a lawyer to review the auction documents to confirm details such as the deposit amount, settlement date and list of chattels. Your lawyer should also review the certificate of title.
Buyers need to ensure their finance is approved prior to the auction and that they can pay the 10% deposit if they are the successful bidder. It is important to note that buyers are not able to use their KiwiSaver funds to pay for the deposit on a property purchased at auction.
Prior to the auction, buyers will have the opportunity to inspect the property. If a buyer would like to purchase the property before the auction, they can make a pre-auction offer. Pre-auction offers must be made according to the terms and conditions of the auction. If the offer is acceptable to the seller, the auction will be brought forward.
If the property does not sell at auction, the highest bidder is offered the first right to purchase the property immediately after the auction and negotiations may then follow. If agreement is not reached, then the property will be offered for sale to all other interested parties.
If you are thinking of purchasing a property at an auction, contact the team at Arnet Law and let us help you through the process.