Purchasing at Auction – A Step by Step Guide

Date Published: 9 January 2024

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:

• You’ll have a first meeting with your Mortgage Adviser.  Fill in forms and give them all the documents they need
• Mortgage is submitted to the bank
• A pre-approval is issued and presented to you.  This should be 5-7 days after submission.

Start Shopping:

• Tick off all conditions on the pre-approval.  The last remaining condition will be the bank seeing a signed Sale and Purchase.  This can’t happen until after the Auction but you need the bank to confirm they are happy with the Sale and Purchase as it is before the Auction.
• Win that Auction!

Some Auction Terminology

• Bid Increment: The predetermined amount by which bids must be raised during the auction. It ensures a fair and organized progression of bidding.
• Hammer Price: The last bidder price, acknowledged by the auctioneer before dropping the hammer (or gavel)
• Live Auction: An auction that takes place in real-time with an auctioneer calling the bids, as opposed to an online or silent auction.
• 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)
• No-Reserve Auction: An auction where there is no minimum reserve price set, and the highest bidder, regardless of the amount, wins the item.
• On-site Auction: An auction held at the property being sold
• Opening Bid: The initial bid offered by the auctioneer to start the bidding process, usually based on the reserve price or the minimum acceptable bid.
• 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
• Withdrawal: The removal of an item from the auction before it has been sold, often due to the absence of competitive bids or other reasons.

If You Win The Auction

• Send the signed Sale and Purchase to your Mortgage Adviser immediately.  Once you have done this, your Adviser will begin to negotiate interest rates for you.
• Meet your Mortgage Adviser and discuss the best structure for your mortgage.  Documents will be sent to your Solicitor by the bank within a couple of days.

The week before Settlement:

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

The day before Settlement:

• You’ll inspect the house and confirm it is acceptable

Settlement Day:

• Your Solicitor will let you know when you the money has been transferred.  You can collect the keys as soon as this has happened.

Congratulations!  You’ve bought yourself a house!!

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