If you win the auction your agreement is unconditional, that means you can’t change your mind!
You take a big risk if you bid without checking the basics about a property first.
Talk to your lawyer before purchasing a property at auction
5 essential pre-auction checks:
If you’ve been house-hunting in Auckland, you’ll know that the majority of properties in the region are selling at auction.This is tough for buyers as you have to do all the checks prior to bidding but remember a property is most peoples largest investment so well worth spending the time and money on!
1. Title – what type of property are you looking at? Is it a cross lease, fee simple, unit title or leasehold? What are the implications of each of these?
2. LIM report – At auctions, the real estate agent often supplies the LIM to save potential buyers the cost of ordering one from the council. The LIM shows all the information the council has on file for the property, like Code of Compliance certificates and any outstanding requisitions.
3. Property file – In addition to the LIM, you may want to go into the Council to do a property bag inspection – this is highly recommended if you suspect un-consented work has been done on the property. You can view the plans and make sure they match what actually exists.
4. Builder’s report – Before buying you should always get the opinion of a building inspector. They will do moisture tests and check things that you may have missed. This can be expensive, but compared to the cost of the house it’s money well spent.
5. Finance – It is important to get finance approval in writing from your lender before you commit at an auction. Pre-approval is only half of the process – you also need to get the bank’s approval for the specific property you are bidding on.
Want to know more about buying at auction?
The Real Estate Agents Authority has a handy Auction Information Sheet that is good to read before attending an auction. This gives you details on how the auction is run and what to expect on the day.