auction contract states 'unconditional approval required' ..help

T

Thesnowyforest

Hey there,

my girlfriend is looking to make her first purchase tmrw at auction however we seem to be having an issue with the contract.

It is a trustee sale.. going to auction so it must be sold.

The vendors solicitor is not removing "clause 43- Warrenty re finance approval."

Am i right in saying that NO bank will give you unconditional finance approval until the auction is done and the bank have their valuation done?

Going forward, do we just go ahead and bid and cross that out when we sign, or ?

the agent said not to worry about it..????
Thanks for any advice.
 
Thesnowyforest said:
Hey there,

my girlfriend is looking to make her first purchase tmrw at auction however we seem to be having an issue with the contract.

It is a trustee sale.. going to auction so it must be sold.

The vendors solicitor is not removing "clause 43- Warrenty re finance approval."

Am i right in saying that NO bank will give you unconditional finance approval until the auction is done and the bank have their valuation done?

Going forward, do we just go ahead and bid and cross that out when we sign, or ?

the agent said not to worry about it..????
Thanks for any advice.
Click to expand...
If you do a search in this site on Auctions,Contracts,RE,as what the agent said "moving foward"..willair..
 
Thesnowyforest said:
It is a trustee sale.. going to auction so it must be sold.
Click to expand...
Not necessarily. If it does not reach the reserve, then it does not get sold. The trustee has a fiduciary duty to the beneficiaries.

Thesnowyforest said:
Am i right in saying that NO bank will give you unconditional finance approval until the auction is done and the bank have their valuation done?
Click to expand...
No you would be incorrect. The bank can get a pre-auction valuation done and issue you with unconditional finance prior to auction. However, more often than not, the price at auction on the day is accepted by a valuer and the bank, as the value.
At this stage your g/f should have a pre-approval in place to a certain $value and she could reasonably safely bid on the property up to that limit.

Thesnowyforest said:
Going forward, do we just go ahead and bid and cross that out when we sign, or ?
Click to expand...
No, that would be a waste of time. When you buy at auction, it is unconditional, there is no 'subject to finance' clauses in the purchase.

Thesnowyforest said:
the agent said not to worry about it..????
Click to expand...
The agent is right in this instance.

All the best for tomorrow.;)
 
Thesnowyforest said:
the agent said not to worry about it..???
Click to expand...
Propertunity said:
The agent is right in this instance.
Click to expand...
Very dangerous advice, especially in a market where prices are falling.

Thesnowyforest, most likely you won't have a problem, however there is a chance (it has happened before) where the bank values a property sold at auction for less than the selling price.

It would be prudent for you to:
- Ensure you have done your own research into market value of the property
- Set a limit slightly under market value and stick with it (it's a buyers market), don't get carried away or pressured by the agents/auctioneers to go over your limit
- Have backup funds available incase you have to cover a gap where the bank valuation comes in lower than purchase price

Goodluck :)
 
hobo-jo said:
Very dangerous advice, especially in a market where prices are falling.

Thesnowyforest, most likely you won't have a problem, however there is a chance (it has happened before) where the bank values a property sold at auction for less than the selling price.

It would be prudent for you to:
- Ensure you have done your own research into market value of the property
- Set a limit slightly under market value and stick with it (it's a buyers market), don't get carried away or pressured by the agents/auctioneers to go over your limit
- Have backup funds available incase you have to cover a gap where the bank valuation comes in lower than purchase price

Goodluck :)
Click to expand...

or just use a bank that users contract price as the valuation

as for the agent 'don't worry" its funny when they have everything to gain and u have everything to lose they tell u not to worry about it,
 
Thesnowyforest said:
The vendors solicitor is not removing "clause 43- Warrenty re finance approval."
Click to expand...

By my saying not to worry about it, I meant that removing the clause or leaving it in, is neither here nor there, as the clause is almost meaningless, in my opinion.

You are warranting that you can get finance or have finance approval (which itself can be withdrawn by the lender who gave it to you, on their whim). But at the same time, you are signing an unconditional contract and paying a 5-10% deposit that you stand to lose if you do not settle. Whether you can get finance or not, the outcome is the same once you have signed, if you do not settle.
 
Nice one people. Thankyou for your responses.

Our bid limit is definately under market value so we hopefully shouldn't have any issues there.

The place is gunna need some work however should be a beauty once complete.

Fingers crossed no ones turns up and ruins our plans!

Cheers

Thanks again.
 
So much for keeping my fingers crossed! haha

ok, so the auction was for a very cute victorian era house in arncliffe.

I knew there was only 1 other interested party and we expected the property to go for low 400's. Cheap. but it need a fair amount of work.

well.. the most surreal scenario reared its head.

Across the road parks this brand new Lamborghini.. and my heart fell. :(

His family lived next door to the house we wanted, so off he went bidding against me with his cheque book in hand and our max limit was $425k. he got it just over that. bargain.....!!!!

major bummer. we would have had it if mr cocaine dealer hadn't rocked up!

oh well, was my first time bidding at auction (on behalf of my girlfriend).. was very nervous.

dont know where else we'll see a house go that cheap that close to the city,.
 
Thesnowyforest said:
So much for keeping my fingers crossed! haha

ok, so the auction was for a very cute victorian era house in arncliffe.

I knew there was only 1 other interested party and we expected the property to go for low 400's. Cheap. but it need a fair amount of work.

well.. the most surreal scenario reared its head.

Across the road parks this brand new Lamborghini.. and my heart fell. :(

His family lived next door to the house we wanted, so off he went bidding against me with his cheque book in hand and our max limit was $425k. he got it just over that. bargain.....!!!!

major bummer. we would have had it if mr cocaine dealer hadn't rocked up!

oh well, was my first time bidding at auction (on behalf of my girlfriend).. was very nervous.

dont know where else we'll see a house go that cheap that close to the city,.
Click to expand...
Just look at it this way one person like yourself stands in line with everyone
else you set you limit,and i'm glad you did that's the first stud in your Lifes-Belt of experience,and as you know now you go into a different world for those brief few minutes:):),the next person after your final bid comes in higher,then someone else puts their hand in the air and blows them out of the water maybe they win with the final bid,everybody is happy the agent the vendors and the winner,plus all the people that you don't see:rolleyes:,But look at it this way you bid what you thought the value is,so did the person who signs on the contract,but they just paided more then the person that opened with the first bid,mabye sometimes 50-400k k more so in the end who's laughing,the only way to know if the house is value is revalue it under Labor in one years time when the Rates will be above 9%,and the "RED-HEAD" will be history and this country will be in control of the ex union dropkicks..willair..
 
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