Auctions can be a simple and satisfying experience, especially when the hammer goes down and you’ve edged the competition to become a proud owner of a fine piece of real estate. That said, there are still many who are not familiar with the auction process, and for them this process can be a daunting and intimidating one. So, in line with Under The Hammer, the cover story of Homefinder September 2013, we’ve come up with a quick step-by-step that will hopefully get you on your way.
1. Ascertain Financing
Before the auction day, bidders should check with the bank of choice (preferably the bank involved in the auction) on their eligibility to obtain a loan and the quantum of it.
2. Obtain Information Pack
The first thing potential bidders should do is to attain the information pack from the auctioneers. This pack will contain all necessary details of the properties. This is where bidders can ascertain and evaluate the property suitable for them.
Potential bidders should register with the licensed auctioneer either during the registration period on auction day or a week before the auction. The following is required to register:
- Registration form duly completed by bidder.
- A bank draft, bankers’ check or money order for a sum amounting to 10% of the reserve price of the property the bidder intends to bid on. Sometimes auctioneers may reduce the deposit to just 5% of the reserve price. Deposit can sometimes be paid via credit card but personal checks are not accepted. The deposit sum will be refunded in full to all unsuccessful bidders after the auction.
4. Obtain Bidder’s ID Prior to Auction
On auction day, bidders should be present at the auction hall before the start of the auction proceedings. Bidders will be given a card bearing the allotted number which will identify him as a bidder.
5. Auction Begins
Auctioneer will announce the specific property being auctioned. Auction will commence with invitation of bids from the floor. Starting bid shall be the reserve price. Price will be raised after a bid and auctioneer will invite bids for the property at a higher price.
Bidders can make a bid by raising his number paddle to get the auctioneer’s attention. Bidders may increase the bid as many times as they want to ensure success in the bidding process.
7. Auction Ends
When no further bids are forthcoming, auctioneer will declare the person who has submitted the highest bid, at the fall of the hammer, as the successful bidder and purchase of the property.
8. Initial Payment and Memorandum Sale
Successful bidder shall be requested to pay the balance of the first 5% or 10% of the purchase price that was bid by bidder immediately to the auctioneer. Solicitors will attend to bidder to execute the memorandum of sale to formalize the purchase of the property. The 90% or 95% of the purchase price shall be paid in accordance with the terms and conditions of the memorandum of sale which is normally full settlement within three to four months from the date of execution of the memorandum of sale or within one month of obtaining consent from the relevant state authorities, and if such consent is required, whichever is later.
9. Finalize Financing
Successful bidder should approach a bank at the earliest opportunity and formally apply and secure a loan for the purchase. In cases of an auction carried out under court’s order, the procedures would be different as the auction will be conducted in the high court in the presence of the bailiff, the assistant court registrar and the licensed auctioneer. In this case, the court will have the power to decide on the bidding amount and id a bid is acceptable for the property.