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Not everyone who attends an auction actually understands the rules of buying. Source: News Corp Australia
AUSTRALIANS might love to talk about property, but a new survey has found an alarming number don’t understand the buying process.
The survey for law firm Slater and Gordon found 42 per cent of potential bidders at auction didn’t even know there wasn’t a cooling-off period when buying at auction.
While most states offer cooling off periods to those who buy through other sales processes, if you buy at auction it is unconditional.
The survey of more than 2000 people also revealed 15 per cent of those intending to bid at auction had not sought legal advice beforehand.
Slater and Gordon lawyer Robert Kern said the results were concerning as there had been a number of huge auction results toward the end of last year and the auction market was starting to pick up again.
He said some bidders at auction didn’t realise they couldn’t change their mind if they were the successful bidder on the day.
Some buyers had no idea that once they bid successfully at auction there was no cooling off period. Picture: Thinkstock. Source: ThinkStock
“If you’re intending to buy at auction, or even think you might, you would want to do your research properly because, once you sign on the dotted line you’re obliged to buy that property,’’ he said.
“It is very easy to be lulled into a false sense of security, especially if people involved in the selling process say to people (buyers) look there is nothing to worry about there is no concerns, then if something pops up obviously they are taken aback.
“Basically the top three tips (when looking to buy) in order are investigate, investigate and investigate.’’
It was also important to make sure solid finance was in place before bidding.
“For example if after the auction it turns out the property is worth more, or less, than what you were led to believe, your financial institution may not being willing to provide finance,’’ he said.
If you are unable to settle on the sale you could lose your deposit worth thousands.
Mr Kern said this had been a big problem during the GFC.
“We do see it definitely from time to time,’’ he said.
“It is generally not as big an issue when the times are good and the valuations are going up, but it is generally a bigger issue when property values are falling. There was definitely a spike in those sorts of issues around the Global Financial Crisis time.