There are two ways to buy a home, you can bid at an auction, or make an offer on a private sale. Each has different legal requirements and responsibilities, so when you have found the house you want, you should do some further research into the type of sale.
When you buy your home, via auction or private sale, you will receive a Contract of Sale that covers all the details of the sale. You should get your solicitor or conveyancer to review and discuss this with you before signing.
The contract of sale is signed by the vendor (seller) and the purchaser, and outlines important information including price, the settlement date and any conditions, if applicable.
At an auction, the property is opened up for sale and people are invited to make a bid.
With a private sale, you usually make an offer to a real estate agent representing the home owners.
How
It's difficult to determine the price the property will sell for at auction, as you don't know how much someone else is willing to pay. Be aware that the advertised price and the final selling price often vary. Keeping an eye on other properties in the area and comparing the selling and advertised price could give you a better indication of the market.
It's important not to get swept up in the excitement and bid over your budget. Work out your maximum budget before the auction and stick to it. An auction is final and there is no cooling off period, so you can't back out if you change your mind.
Be sure to take your cheque book with you, as once you win at auction you need to pay your deposit straight away. You should also make sure you have your loan formally approved before buying.
You can either make a Conditional offer or an Unconditional offer. A Conditional offer has certain conditions that must be met before the sale proceeds, such as repairs to be made. If the conditions are not met, you may pull out of the purchase. An Unconditional offer does not have any conditions, and is a firm offer to purchase.
The owners will then either accept or reject the offer. There may be some negotiations of price, until both parties are happy.
Be aware that until the contract of sale is signed, the home is not yours. A verbal agreement is not legally binding, so if someone comes in with a better offer, you may lose the home.
Tip:
Auctions are a highly emotional event, and can be quite daunting. It's a good idea to familiarise yourself with the process by watching as many auctions as you can.
You may prefer to ask a friend or family member with more experience and less nerves to bid for you. Professional buyers' advocates will also bid on your behalf for a fee.
