If you are looking to buy, ensure you visit auctions before you bid - it is an experience you don't want to be dropped into cold. Hear the language the people are talking. Talk to buyer's agents, real estate agents or auctioneers - do your homework.
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When you make the winning bid at auction, you immediately enter into a binding contract so it is very important that you have your home loan pre-approved and know your limit.
It also means you'll need to provide a deposit - usually 10 per cent of the sale price - on the day, before you head off to celebrate.
Having your payment method figured out before you don your auction hat will save a lot of stress.
Having your payment method figured out before you don your auction hat will save a lot of stress.
Check the deposit conditions first.
Before you do anything, check in with the selling agent. Confirm that you only need a 10 per cent deposit, not more, and find out which payment options are acceptable.
Option 1: Pay by personal cheque.
Personal cheques can certainly be handy at an auction. The beauty here is that you can make the cheque out to the exact figure of the deposit as soon as you make the winning bid.
Be sure to confirm if any personal ID is required when making your auction deposit with a personal cheque.
Option 2: Pay by bank cheque.
A bank cheque acts like currency, so you can effectively cash your cheque on the spot.
The downside is, you need to know how much it's for when you get it, and most financial institutions are closed when auctions are held.
Your best bet is to organise it in advance for 10 per cent of the highest amount you're willing to pay.
If you get a bargain, you'll pay more than the minimum required deposit, but that just means the additional cash is now tied up in your new home.
You'll also pay a fee to have a bank cheque drafted - about ten dollars. If you're unsuccessful at several auctions the cost will start to add up.
Option 3: Organise a deposit bond.
This is like an insurance policy for your deposit. It acts as a guarantee of the deposit payment.
At settlement, you simply pay the full purchase price including the deposit.
It's a guarantee to the vendor that you will pay your deposit, and of course, it is legally binding. A one-off fee is required. There are no ongoing fees or interest charges.
The fee varies depending on the term of the Deposit Bond / Guarantee and the amount required.
Not all agents will accept a deposit bond, so make sure you double-check beforehand.
Auctions are already stressful enough. Make sure you organise your payment method ahead of time.
