KEY TAKEAWAYS:
- No cooling-off period
- Finance must be pre-approved
- Conduct all inspections and Contract review beforehand
- Pre-auction negotiations are possible
Purchasing a property at auction can be an exciting yet high-pressure experience, particularly in New South Wales, where auction laws are strict and unforgiving. To navigate this process successfully, prospective buyers must be fully prepared before stepping into the auction room. Here are several critical tips to help purchasers make informed, confident decisions when buying at auction in NSW.
1. Understand There Is No Cooling-Off Period
One of the most important legal distinctions when purchasing a property at auction in NSW is that there is no cooling-off period. Unlike private treaty sales, where buyers have a few days to withdraw from the contract (typically five business days), auction sales are immediately binding.
Tip: Only bid if you are 100% certain you want the property and have completed all necessary due diligence.
2. Arrange Finance Well In Advance
You must have your finances in order before attending an auction. Since the contract becomes unconditional once the hammer falls, any delay or failure to secure funds can result in severe financial penalties, including the loss of your deposit.
Steps to take:
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Obtain full pre-approval from your lender, not just conditional approval.
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Ensure you understand the amount you’re approved for and any conditions attached.
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Have a clear limit in mind and stick to your budget during bidding.
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3. Conduct Thorough Due Diligence
Since there’s no chance to renegotiate or withdraw after winning at auction, buyers must do all their homework in advance. This includes:
- Obtain Property Reports
- Pest and Building Inspection Reports: These identify structural or pest issues that could cost thousands to rectify.
- Strata Reports (for apartments): Review levies, the financial health of the strata fund, and any planned works or disputes.
- Contract Review
- Have a solicitor or conveyancer review the contract of sale before auction day to check for unusual terms or restrictions.
- Understand Zoning and Council Requirements
- Check with the local council for zoning, future developments, or restrictions that may affect the property.
4. Negotiate Changes Prior to Auction
While you can’t negotiate once you’ve won, it is possible to negotiate certain terms before the auction:
- Deposit Amount: Standard is 10%, but some vendors may accept 5% if agreed in writing beforehand.
- Settlement Period: Buyers can sometimes request a longer or shorter settlement timeframe depending on their circumstances.
Any changes must be agreed upon and documented by the vendor’s solicitor prior to auction day.
5. Register to Bid and Understand Auction Rules
To bid at an auction in NSW, you must register and receive a bidder’s number. Bring valid identification and ensure you’ve reviewed the auction terms and conditions. Keep in mind:
- Bidding is final – there is no room for negotiation once your bid is accepted.
- The vendor may set a reserve price – if bidding doesn’t reach this, the property may be passed in.
6. Be Prepared to Pay the Deposit on the Day
If you’re the successful bidder, you’ll need to sign the contract and pay the deposit immediately, usually 10% of the purchase price. Ensure you have funds available, often via bank cheque or electronic transfer, as specified by the selling agent.
Stay Informed
Buying a property at auction in NSW demands a high level of preparation, from legal reviews to financial arrangements and personal readiness. By understanding the lack of a cooling-off period, securing finance early, and conducting thorough due diligence, you’ll place yourself in a strong position to make confident and informed decisions under the pressure of auction conditions.
If you’re unsure about any part of the process, please reach out to our Conveyancers, who can guide you every step of the way.
ABOUT KAY VITOGIANNIS:
Kay joined the Coutts team in May 2021 working as a Licensed Conveyancer within our Property & Conveyancing team, based in our Narellan office.
Kay has over 20 years of experience in the Legal industry. She began her journey in CBD Conveyancing firms as a secretary and attained her Advanced Diploma in Conveyancing in December 2010.
For further information please don’t hesitate to contact:
Kay Vitogiannis
Licensed Conveyancer
info@couttslegal.com.au
1300 268 887
This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.
