Buying Tips

Whether you are buying an investment property or a new home to live in, there are some common problems you need to be aware of to ensure your purchasing experience is stress free and risk free. These few buying tips will make you aware of some of the pitfalls and ways to avoid them.

Why Are You Buying?

Think about why you are purchasing the property. If you intend living in the property does it really suit your needs? If you have young children or elderly people living with you, you might wish to avoid stairs and prefer a level block. Do you intend to install a pool in the future? Is the garden too big or too small? Will you need more bedrooms in future? Is it close to schools etc.

Building Reports

Be sure to have reports for building inspection and pest inspection prior to committing to the purchase.

Meet Your Neighbours

If you are buying a villa, apartment or townhouse you may be sharing a common wall with your neighbours. It would be advisable to check noise levels if possible. Try to meet your new neighbours. They may not share the same values as you.

Do Your Research

By researching the real estate market in a particular area you will be much better informed on property values. Ask Arrow Finance Corporation to show you some comparable properties which have sold in the area.

Check With Your Local Council

If a property has been renovated recently you might wish to check with the local council to ensure planning or building permits were approved. Deciding how much to offer can be difficult. You might wish to make your best offer up front or start with a lower offer and be prepared to negotiate up. However, purchasers who make higher offers might secure the property without giving you the opportunity to increase yours.

Buying At Auction

If buying at auction you should have:

• Decided on a definite upper limit within your means
• Conducted inspections
• Had legal documents checked by your solicitor
• Organised a cheque for the deposit
• Finance approved

When bidding, bid with confidence and authority.

Cooling Off Periods

Note cooling-off periods can be waived subject to certain conditions.

selling By Auction

Selling by auction is an exclusive agency agreement and is therefore also subject to the 60-calendar day agreement period. The auction process requires the seller to pay the agent to arrange effective marketing and advertising plans to maximise exposure of the property and the auction date to potential buyers.

Under the auction system, the seller agrees to pay commission to the listing agent if the property sells before the date of the auction, at the auction or in an agreed period after the auction. The same conditions that apply to the auction process will also apply to the tender process.

There are many advantages to selling a property at public auction, in particular: An auction is a three-pronged marketing push. The vendor has the opportunity to sell their property before auction, on the day of auction, or in the event the property is passed in, directly after auction.

There is an ability to set a reserve price and a settlement date to suit the seller. As the reserve price is not disclosed it gives the seller a chance to test the market. A written marketing plan with pre-agreed appointment times enables the sellers to arrange their lives during the lead up period.

The auction process by its very nature creates a sense of urgency; buyers have a definite time frame in which they must act. Buyers see the purchasers as competition rather than the seller. Auctions create a competitive environment. With sale by auction in Queensland, all contracts are unconditional and no cooling-off period applies.

Tips for a successful auction

• Work out the appropriate advertising budget to ensure your property is widely advertised taking into account the identified market.
• Make sure the property is well presented because a potential buyer’s first impressions are crucial to a successful sale.
• Your agent will require that the contract and the accompanying statutory searches be available well in advance of your marketing campaign. Confer with your agent about this matter as they should be able to provide a tick list to help.
• Allow the agent to arrange as many inspections with prospective buyers as possible – it all creates interest. At a local level this could have a significant effect on the turnout on the day.
• For most, the spectacle will be the main draw as well as the eventual selling price so confidentiality is of the upmost importance. The REIQ suggests that you do not disclose or discuss your reserve price with anyone except your agent/auctioneer.
• A sale by public auction is arguably one of the most exciting, effective and rewarding methods of buying and selling real property.

Buying At Auction

Your dream home has just come onto the market and with a certain amount of trepidation you realise that it is being sold by auction. You’ve never been to an auction before – never mind purchased a house at one – and you’re a little worried that you won’t know what to do.

How to get a good deal

Make sure you have finalised all important details before the auction date. Extensive preparation is essential to a happy auction experience.

• familiarise yourself with the auction process by visiting as many auctions as you can. Ask questions of the marketing agents and find out everything you need to know about bidding.
• Inspect the property before the auction date. Be objective and make sure you inspect other properties as well. Inspecting other properties means you can make an educated guess as to a fair purchase price. Work out how much you are willing to pay and do not exceed your maximum on auction day. If necessary, arrange an independent valuation.
• Make an appointment with the real estate agent and ask as many questions as possible, including bidding strategies. Also request a copy of the contract, including condition reports, and study it carefully.
• Visit your lender and finalise any home loan arrangements. A deposit, often as much as 10% of the purchase price, will need to be paid on completion of the auction, so ensure you have these funds available.
• On auction day it’s important to remember that while the auctioneer is employed by the seller to get as good a price as possible for their house, they are also there to help you buy the property.
• Work out your tactics before the auction and stick with them. Your visits to other auctions should give you an insight into bidding tactics, such as changing the increments of the bids away from the auctioneer’s chosen amounts or those of the other bidders. This can intimidate other bidders; it shows confidence and a strategic plan. More often than not, a confident bidder ends up buying the property!

Vendor, dummy and co-owner bids

The main difference between vendor, dummy and co-owner bids is that dummy bidding in Australia is illegal. A vendor bid is where the auctioneer will place a bid on behalf of the seller with a view to assisting the property reach its reserve price. Vendor bidding can only be done by the auctioneer or another legally permitted person and should be declared as part of this auction’s process before the auction begins.

Alternatively, dummy bidding is just false bids made by non-genuine crowd members. They have no intention of buying the property and are there purely to inflate the price. Unfortunately, some unscrupulous agents still partake in this illegal act so don’t bid until the house is placed on the market as dummy bidding is generally only used until the reserve price is met.

A co-owner is a person who has a financial share in the house, such as a divorced spouse, who wishes to buy out the other owners. Co-owner bids cannot be made through the auctioneer and are not announced during the auction. However co-owner bids are declared in the rules set out before the auction starts.

How are auctions regulated?

Auctions are a recognised and widely used form of selling. Not just property but livestock, household goods and cars are auctioned, just to name a few. Each state and territory in Australia has their own set of regulations governing auctions, designed to protect both the vendor and vendee.

The Real Estate Institute in each state and territory sets down guidelines detailing their code of practice for the industry. By ensuring your chosen agent is a member of the Institute, you can guarantee a high standard and an auctioneer who will adhere to each and every regulation.

Not many complaints are made about auctions in Australia, however if you do have any problems, contact the Real Estate Institute in your state who will be able to refer you to the relevant authority. To find your state’s Real Estate Institute visit www.reiaustralia.com.au.