Nicola Kelland - Buying at Auction

You have found the home of your dreams, but it is being sold by auction, so what do you need to do and know before you bid to buy.

Auctions are common these days as a method of selling of selling. Unlike others methods of sale, auctions require a purchaser to bid and buy on an unconditional basis. That means once you are successful, you are legally bound to buy that property and there is no way of backing out of the contract. If you don’t settle on the property, you will lose your deposit and may face further far reaching legal and financial consequences. Therefore, it is essential to make sure you know everything about the property before you buy. It may cost a bit of money, but it could save you thousands, if later you find there is a problem with the property.


Paperwork
The first step is to make sure you obtain from the real estate salesperson, all the information they have on the property. A property title and a LIM are essential, once you have these, make sure you read them thoroughly and take them to your lawyer for legal advice. They should scrutinise the LIM more thoroughly for any issues or problems. Obviously Code Compliance Certificates for building works are essential, but remember your lawyer has probably never seen the property you want to purchase, so if you think there has been more than a little cosmetic alteration to the property, and no building consent is recorded, discuss this with them. They may want to seek reassurance from the vendors that any works completed did not require consents from council. If you have any further concerns, you can order from council a property disk, which will give you all the information, plans, consents etc that the council has on file.


Neighbouring properties & zoning
The last thing you would want to have happen once you have purchased, is to find out that the neighbours are planning to build a large commercial building or an apartment building right beside you, or the council is planning a new major road that will affect your quiet enjoyment. Find out from council what the zoning is for the property you wish to buy, and the neighbouring properties, how high can they go, what restrictions are there, and ask council about any plans or consents they, or the owners of the properties, have for the future.


Building inspections
You should have a building inspection done. You need to know what state the house is in structurally, and what other work you may need to do in the future to maintain the property. This is essential if you are buying a property, that due to the nature of the construction, architecture or the period in which it was built, could potentially have watertight issues.


Valuations
You may need to get a valuation done by a registered valuer, either to enable you to get finance, or for your own peace of mind, to establish the market value, and what price level you can feel comfortable bidding to.