Buying at Auction 101

At Ray White Morrinsville, we believe auctions are the most transparent way to buy a home. You can see your competition, hear the bids, and know exactly where you stand in real-time.

However, because an auction contract is unconditional, you need to do your homework before the hammer falls. Here is everything you need to know to be “Auction Ready.”

1. The Golden Rule: Do Your Due Diligence First

When you win at auction, the contract is legally binding and cannot be subject to any conditions. You must complete these four steps before auction day:

• Finance Approval: Speak to your bank or broker. Ensure they have seen the specific property’s contract and that your “pre-approval” is valid for an auction purchase.
• Building Report: We recommend getting a professional inspection to ensure there are no hidden surprises with the structure, moisture levels, or wiring.
• Legal Review: Send the Title and the Auction Agreement to your solicitor. They will check for easements, covenants, or any legal restrictions on the property.
• The LIM Report: The Land Information Memorandum (provided by Matamata-Piako District Council) tells you about the land’s history, drainage, and any permitted works.

2. Understanding the Terms

Before the auction starts, the agent will make the Terms and Conditions available. Key things to check:

• The Deposit: Usually 10% of the purchase price, payable immediately upon the fall of the hammer.
• Settlement Date: This is the day you pay the balance and move in. This date is set by the seller but can sometimes be negotiated before the auction starts.
• Chattels: Check the list of what stays with the house (e.g., dishwasher, heat pumps, light fittings).

3. What Happens on Auction Day?

The auctioneer will open the bidding. If the bidding reaches the Reserve Price (the minimum price the seller is willing to accept), the property is announced as “On the Market.”

• If it hits Reserve: The highest bidder at the end of the auction is the new owner.
• If it doesn’t hit Reserve: The property is “Passed In.” The highest bidder usually has the first right to negotiate with the seller privately.

Pro Tip: Don’t be afraid to start the bidding! It shows you are a serious contender and helps you set the pace.

4. Can’t Be There in Person?

If you can’t make it to our Morrinsville auction room or the property site, you have options:

• Telephone Bidding: An agent can act as your “voice” over the phone.
• Proxy Bidding: You can authorize someone else to bid on your behalf.
• Online Bidding: We often use digital platforms that allow you to bid from your living room.
• Note: These require specific legal forms to be signed 24–48 hours in advance.

Frequently Asked Questions (FAQs)

Q: Is the “Reserve Price” the same as the “Rating Valuation (RV)”?
A: No. The RV is for council tax purposes and is often outdated. The Reserve is based on current market feedback and the seller’s expectations.

Q: Can I buy a house before the auction day?
A: Sometimes! If the seller is open to it, you can make a “Pre-Auction Offer.” If the offer is high enough, the auction may be brought forward.

Q: What if I’m a first-home buyer using KiwiSaver?
A: You can absolutely buy at auction, but you must work closely with your lawyer to ensure your Kiwisaver withdrawal and HomeStart grants are lined up to meet the settlement date.