Auctions – A Step by Step Guide to Purchasing a Property at Auction

Buying at auction can be exciting but also intimidating. Much like your year 5 school production, knowing what to do and when to do it will help you feel more excited and less stressed. So read on and bust those auction jitters.

When You’re Ready to Start Looking:

• Meet with your Mortgage Lab mortgage broker. They will guide you through the mortgage pre-approval application process.
• Mortgage application is submitted to one or more mortgage lenders (i.e. banks).
• A pre-approval is issued and presented to you. This is usually 5-7 days after submission.

Start Shopping:

• When you find a property who’s auction you’d like to attend, let the real estate agent know. They will provide you with an auction pack consisting of all the property information and the auction registration details.
• Tick off all conditions on the pre-approval prior to auction day. The only exception will be the condition of a signed sale and purchase agreement. This condition can’t be met until after the auction. Instead, ask the bank to confirm they are happy with the details in the unsigned sale and purchase agreement.
• Register for auction.
• Show up on the day with your game face on and win that auction!

Some Auction Terminology

• Hammer price: The last bidder price, acknowledged by the auctioneer before dropping the hammer (or gavel).
• Minimum bid: The smallest amount that can be bid by a buyer, usually established through consultation with the seller.
• Maximum bid: The maximum bid set by a buyer who is bidding remotely (or by proxy).
• On-site auction: An auction held at the property being sold.
• Reserve Price: A price set by the seller that a buyer must reach before the seller is obligated to sell.
• Sniper: A bidder that enters a last minute bid as the auction is due to be closed.

If You Win the Auction

• Do a fist pump or throw your auction documents in the air while shouting a victory cry.
• Send the signed sale and purchase agreement to your Mortgage Lab mortgage broker immediately.  Once you have done this, your broker will begin to negotiate interest rates for you.
• Meet your Mortgage Lab mortgage broker and discuss the best structure for your mortgage. Documents will be sent to your solicitor by the bank (or mortgage lender) within a couple of days.

The Week Before Settlement:

• The bank will arrange for you to come in and open all the related bank accounts.
• Your solicitor will arrange for you to come in and sign the documents.

The Day Before Settlement:

• Carry out a pre-settlement inspection of the property to check building, chattels and grounds are in the expected condition. Advise your solicitor immediately of any issues.

Settlement Day:

• Your solicitor will let you know when the money has been transferred. You can collect the keys as soon as this has happened.
• On the evening of your move, have the traditional and compulsory meal of fish and chips on the floor of your new home, surrounded by half unpacked boxes.

Related Articles

• 6 Tips for Bidding at Auction

Left wanting more? Settled.govt.nz is a great government website for more in-depth information on the auction process.