Mortgage Matters

4 mortgagematters

Buying at Auction

Love them or hate them, auctions are a common feature when looking to buy in the Auckland property market.

Things to consider before when you purchase via an auction:

1) Regardless of the age of the house, you should get a building inspection done. Just because the house is new or near new does not mean it was built in a professional way. The last thing you want is to buy a lemon; 2) Remember to consult your lawyer: they will need to review the LIM report and the Sale and Purchase Agreement. Depending on the LIM’s availability, this could take two weeks; 3) If you are relying on mortgage for the purchase, then you must consult your mortgage adviser and obtain a pre-approval. The lender will have to approve the property before you bid; 4) Organize a deposit. Generally, a 10% deposit is required. However a 5% deposit could be placed if you talk to the real estate agent and the vendor agrees; and 5) Most importantly: if you have completed your due diligence and are ready to proceed, why not place a pre- auction bid. Not all vendors want to go all the way to the auction date and may prefer a quick sale; with fewer open homes and less marketing.

If your unconditional offer is accepted, the auction is brought forward, to be held 48 hours after acceptance. This change of auction date can considerably reduce the number of people at the auction, improving your chances of success. On the flip side; if your offer is not accepted, you will get a feel for the vendor’s price expectations and can either walk away or reassess your initial offer.

For further details feel free to contact Ivan on 09 427 5870 or 0275 775 995 or email ivan@ivanurlich.co.nz Ivan Urlich is a registered financial adviser specialising in mortgages. His disclosure statement is available free of charge on request.

Please note the above should be considered a general rather than a complete list of items approaching an auction purchase.