Guide To Buying At Auction

Thank you for your interest in this property.

Attached is the information the vendor has provided, which I have gathered to assist you, for your due diligence.

A Pre-Auction offer could come in any time, so I suggest you begin your due diligence straight away so you are ready if this happens, and prepared should the auction suddenly be brought forward with 24-48 hours notice.

Firstly, contact the owners Insurance Company to ask if they will insure you as the incoming owner should you be the successful bidder at Auction. When you contact the insurer, quote the policy number. You may need to send them information I have sent you.

Arrange for finance approval on this particular property with your mortgage lender, and arrange how you will pay a 10% deposit on the day, should you be successful. Investigate the cost of bridging finance (if you have a house to sell) just so you know what to expect should you own two homes for 4-6 weeks.

Have your solicitor check and approve the Title, LIM, Particulars and Conditions of Sale, and EQC claim information.

Organise any other inspections or reports that you require.

If you require a different settlement date from that which is noted on the front page of the Auction Agreement (Particulars and Conditions of Sale) or any other variations to chattels or deposit, this request needs to be on an Aside Agreement form and presented to the vendors for approval and signing prior to the auction.

If I can help in anyway, please give me a call.

Due DiligenceCheck-list

How To Find Our Auction Rooms

How to Find Our Auction Rooms

Russley Golf Club Function Centre 428 Memorial Avenue, Burnside, Christchurch

The Russley Golf Club is located approximately fifteen minutes from the city centre, and two minutes from the Christchurch International Airport.

To find the Golf Club, turn off Memorial Ave into Stableford Green, and it is first on your left.

Plenty of parking is available on site.

Christchurch International Airport

Copthorne Hotel

Russley Golf ClubStableford Green

How The Auction WorksAn auction is the process by which all interested parties can make competitive bids to purchase a property in a transparent, public forum. Auction is regarded as the best method of establishing true market value.

The Advantage Of Buying At AuctionThe auction process allows buyers the option of increasing an offer while being aware of the position of the competition. This differs from other buying methods, where various parties are competing against unknown offers negotiated in their absence.

You’ve Found The Property... Now What?So you’re ready to go. Before the big day, it pays to have these details covered.• Leaveyourcontactdetailswiththepropertyconsultantandrequest to be kept informed of any changes leading up to the auction.• Makesureyouareacquaintedwiththelocalarea,servicesand facilities of the property.• Questions?Besuretoseekprofessionaladvice.• Getafeelingfortheprocess.Attendingotherauctionswillhelpyou better understand how they work.• Havethemoneyready.Ensurethatyouhaveapprovedfinanceprior to bidding, and that you can access the 10% deposit.• Haveyourlawyercheckthecontract,titleandanyotherinformationavailable.• Advisetheconsultantifyouhaveinstructedathirdpartytobidonyourbehalf.

Tips For Bidding

• Establishalimityouwishtospendandstartbiddingwhenthefigure is below or in your price range. When you start at your limit, there is little time to build momentum and establish yourself as a bidder.

• Bidclearlyandpromptly,asalastminutebidcouldbemissed.Also, show the competition you’re serious. Place each bid with authority and do it quickly. If others sense you are wavering they might think the hesitant bid is your last one. So they’ll be encouraged to keep going.

• Beawarethatinthevendorsbestinterests,theauctioneerhastheright to accept or reject any bids and will also set the bidding increments. When the auctioneer is about to sell they will call three times and, if there are no further bids, knock the hammer down, signalling the sale.

• Whenyousucceed:Youwillimmediatelysignthecontractandpay the 10% deposit.

Buying AtAuction

Do I Have To Be In A Cash Position To Bid?The straight answer to this question is yes. To bid at an Auction you need to be bidding in cash. 10% only is required on the day of the Auction, balance is due on the possession date. However, as explained below, you may talk to the Auctioneer about extending the possession date and giving you longer to arrange money. Also with an Auction you may have a lead-up period of up to 4 weeks that also should allow you to get into a cash position.

How Do I Work Out The Price?The auction system allows you, the market, to firstly appreciate the house and then determine the price. We as marketers, find that some people become experts in a particular price range and they are able to indicate pretty well exactly what a home is worth. They do this by drawing on the experience of the homes they have looked at in that particular price bracket. If you need help with a guide to the price, ask the consultant for guidance. Whilst you will not get actual figures, a consultant will normally be able to supply you with a list of similar homes that have sold in the area which compare with the Auction home. You may also decide to get a valuation.

What About Selling My House?One of the benefits of buying at auction is the fact that if the home does reach auction you may have up to three months with prior permission from the vendors, to organise and get your own home sold. The fact that you own a home is not detrimental to your bidding at auction. Talk to your consultant about whether they might have somebody “waiting” for a home like yours as an early sale might be closer than you think. It’s worth remembering other buyers will be in the same position you are, and if you get a cash offer on your home, you are in an extremely strong position to either buy the Auction property before Auction or on the Auction day. If you believe your home is “saleable” you may also consider talking to the Auctioneer via your sales consultant about extending the possession date on the Auction property, thus giving you extra time to get your home sold.

How Do I Borrow Money When I Don’t Know The Price?Most lending institutions are now conversant with modern auction techniques and once you have worked out the price you believe the property is worth, as in question 2, when you discuss this with banks or lending institutions, you will find they believe it quite acceptable to agree to lend you up to a certain “bidding price”. You will then know just how high you can bid at the auction. Overall though, the fact that you are borrowing money should not prevent you from bidding or buying at an Auction.

Can I Have Someone Else Bid For Me?Yes. Anyone may bid for you on the auction day. They may, if they are a professional person, require written advice as to how high you wish them to go. Other bidders (if you find it too traumatic) would be your solicitor, the real estate consultant, perhaps an experienced member of your family or valuer. With the permission of the vendor and with prior notification, you may also bid by phone.

Frequently Asked Questions

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What Are The Normal Conditions That I Would Buy Under?10% of the purchase price is required to be paid on the auction day if you are the successful bidder. That is; you need your chequebook and the ability to have a balance in your account to cover the deposit once it is banked. It is considered if you bid at auction that you have bid unconditionally and for cash, i.e. if your bid is successful, you have bought the home. There is no subject to finance, or subject to sale clauses, you have bought the house. There is nothing to be wary of so long as you have done your homework and have sought the correct advice along the way. You are essentially making a cash unconditional offer. Possession is as per the Particulars and Conditions of Sale, and can be up to three months after the Auction date, particularly if you have a property to sell. Some owners will consider variations and these are recorded individually on an “Aside Agreement” to allow potential buyers to be able to bid on the day. Chattels are normally mentioned in the Particulars and Conditions and you look for them and make sure they tie in exactly with what you believe is being left in the home.

Can I Buy Before Auction Day?Some owners may consider selling before Auction day, some may not. They would normally need to believe that the offer was a very good one to convince them to sell prior to auction. Because the property is going to auction, if an acceptable pre-auction bid is tabled all interested parties are contacted.

What Is A Vendor Bid?The conditions of sale state that the vendor has the right to bid himself or through an agent or through the auctioneer. This bid may be used to start the auction or by the auctioneer during the auction to increase the bidding. The auctioneer will disclose all vendors bids. If someone else will be bidding for the vendor, other than the auctioneer, that person will be identified before the auction. Vendor bids WILL NOT be exercised once the reserve has been reached.

What Are The Particulars And Conditions Of Sale?This is the contract that you will sign if you are the successful bidder on the day. It is simply a contract that spells out the conditions under which you have bought the home (see Q6), and binds you to the purchase of the home. It also binds the seller to sell to you as per the auction bidding. The Particulars and Conditions are available prior to the auction. If you have any doubts on wording and the clauses included, you should consult the sales consultant concerned or your solicitor.

Frequently Asked Questions

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Let Us Show You How We Can Help You To...

• Arrangefinancebeforetheauction,providingyouwithyour upper limit to bid.

• Organiseyourdeposit.

• Purchaseapropertybeforesellingyourexistinghome.

Don’t Miss Out At Auction Time!

Your borrowing ability does vary from bank to bank! Here’s an example of borrowing power from 4 main trading banks based on a couple both earning $40k per annum with 1 car each, no liabilities and no dependants.

Bank A lends $502,000

Bank B lends $422,000

Bank C lends $485,000

Bank D lends $450,000

Which bank is yours?

Are you armed for the auction with the maximum approval?

Don’t be outbid at the auction because you’ve chosen the wrong bank. Talk to our Mortgage professional and give yourself the best chance at auction. They can advise you on which banks should lend you what, what each bank is currently offering, what’s required from you to get your finance fully approved for auction; and best of all, they won’t charge you for the advice or tell you which bank you should be with. Contact Anthony Woolcott for a free, no obligation home loan consultation today.

Anthony Woolcott - Mortgage ExpressMortgage Consultant & Insurance Advisor

P 03 383 6595 F 03 383 6597

M 027 483 1131

E anthony.woolcott@mortgage-express.co.nz

*Disclaimer - figures are the maximum borrowing amount based on using the banks standard servicing criteria and are subject to change. This is not an offer of finance. Figures assume the clients have a genuine 20% deposit over and above the borrowed amount.

Bank ‘B’ Bank ‘C’ Bank ‘D’Bank ‘A’

(000’s)

$400

$420

$440

$460

$480

$500

Get Pre Approved Finance

The property is offered for sale subject to a reserve price, and subject to the reserve price being met, the highest bidder whose bid is accepted by the auctioneer shall be the purchaser.

The auctioneer may nominate the sum by which the bidding can be raised.

The auctioneer may refuse a bid.

The auctioneer or licensed real estate agent acting for the vendor in respect of the sale may submit a bid on behalf of any person. The auctioneer shall identify a person so acting before the commencement of bidding.

The vendor may bid personally, or by a representative, or through the auctioneer, provided that the bid is less than the reserve price. The auctioneer shall identify each vendor bid as it is made.

The vendor may withdraw the property at any time before it has been sold and without declaring the reserve price.

If any dispute arises concerning any bid, the auctioneer may determine the dispute or re-offer the property at the last undisputed bid.

Thepurchasershallimmediatelyonthecompletionoftheauction:

• Sign the Memorandum of Contract failing which the auctioneer may sign on behalf of the purchaser; and

• Pay to the vendor’s licensed real estate agent the deposit being 10% of the purchase price unless otherwise agreed; and

• CompleteitsGSTinformationinSchedule1,ifapplicable.

Terms & Conduct Of Auction

Code of Practice for the Sale of Real Estate by Auction

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1. General

1.1 When conducting the sale of a property by auction, members shall not engage in any conduct which is misleading or deceptive or is likely to mislead or deceive. This principle applies to conduct prior to, at and after the auction.

2. Before the Auction

2.1 Members shall not advertise a property as being for sale by auction unless there is intended to be an auction and unless a written auction authority form has been duly executed by or on behalf of the vendor.

2.2 Members shall provide a copy of this Code to prospective vendors prior to having them sign the auction authority.

2.3 Vendors must sign an acknowledgment of acceptance of the terms of this Code, which shall form part of the auction authority.

2.4 Prior to the auction the member shall make available for inspection the terms and conditions under which the sale of the property by auction will be undertaken.

2.5 If applicable the member shall specify in such terms and conditions of sale that the vendor reserves the right to bid either personally or through an agent.

2.6 The member shall make this Code available for inspection prior to the auction.

2.7 Members must make reasonable endeavours to inform all interested parties if a property is to be withdrawn from auction or is to be sold prior to auction.

3. At the Auction

3.1 The auctioneer shall conduct the auction at all times with integrity and in compliance with the law of New Zealand and this Code.

3.2 The terms and conditions of sale shall be on display and available for inspection, together with this Code, at the auction. Any portion of the terms and conditions of sale relating to the description of the property will be read aloud by the auctioneer at the commencement of the auction of that property.

3.3 Before commencement of the bidding for a property the auctioneer shall announce whether the vendor has set a reserve price. The reserve price, if any, shall not be disclosed to bidders.

3.4 Before commencement of the bidding for a property the auctioneer shall announce whether the vendor has reserved the right to bid one or more times at any level below the reserve price at the auction and, if so:

(a) Whether the member has been appointed to bid on behalf of the vendor and, in such case, that all bids made on behalf of the vendor will be made and declared by the auctioneer; or

(b) Whether the vendor or some other person will be bidding on behalf of the vendor and shall identify that person in which case any bid made by that person shall be declared by the auctioneer.

Neither the member nor any salesperson engaged by the member shall make or assist any other person to make any bid on behalf of the vendor in contravention of any announcement by the auctioneer pursuant to this clause. The member, or any salesperson engaged by the member, shall immediately advise the auctioneer of any bid which they believe to be made in contravention of this clause.

3.5 Where the vendor does not provide the auctioneer with a written reserve prior to the auction, the auctioneer shall announce that the property is to be sold without reserve and no bid shall be made by or on behalf of the vendor at the auction.

3.6 In making a bid on behalf of the vendor at the auction, the auctioneer shall exercise his/her independent judgement.

3.7 Where in advance of the auction, any contractor/employee of the member or the auctioneer has been requested to bid for a prospective purchaser, whether that purchaser is present or absent, the auctioneer will announce that fact and identify those contractors/employees who will be so bidding.

3.8 The auctioneer shall ensure that the amount of any bid is clearly stated.

3.9 The auctioneer may refuse any bid.

3.10 The auctioneer shall resolve any disputed bid in accordance with the terms and conditions of sale governing the auction. If such terms and conditions do not specify how disputed bids are to be resolved then the auctioneer shall resolve any disputed bid in accordance with the Particulars and Conditions of Sale by Auction 2nd Edition (or any document approved by the REINZ in substitution thereof).

3.11 Under no circumstances will a bid by or on behalf of the vendor be exercised by the auctioneer at or in excess of the vendor’s reserve price.

3.12 The auctioneer will always clearly announce if the property is about to be sold under the hammer.

3.13 Subject to the reserve price being reached, the highest bidder shall be the purchaser.

3.14 If the vendor so instructs, the auctioneer will announce during the course of the auction that in the event of the property being passed in the highest bidder will have the first right of purchase of the property at the vendor’s reserve price.

4. After the Auction

4.1 If a property is passed in at auction, no post-auction advertising for the property shall make any reference to any vendor bid made for the property at the auction.

5. General

5.1 Members shall promptly report any alleged breaches of this Code to the Real Estate Institute of New Zealand Inc in writing specifying the particulars of the alleged breach and providing originals or copies of any relevant documents.

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Real Estate Institute of New Zealand Inc.

202 Parnell Rd, PO Box 5663, Auckland 1, New Zealand Ph: 09 356 1755 Fax: 09 379 8471 e-mail: reinz@reinz.co.nz Dx: Cp31508 Parnell www.reinz.co.nz