Deposit Bond and Auctions

From: Jay Hunter

Can you use a Deposit Bond instead of cash for a deposit at an Auction ? if so, do people use them ?

Is there any advantage in using them for a 42 day settlement ?

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Reply: 1
From: Paul Zagoridis

Hi Jay

I have requested the option to substitute a deposit bond for the deposit cheque within 24 hours of the auction (didn't have ready cash at the time and the deposit would have come from credit card cash advance).

I've normally made that request in writing to the agent 3 days before the auction and again handed the Auctioneer a letter outlining that (and any other) condition. Don't ambush the Auctioneer on the day or they'll "just say no". The vendor has to approve anything other than the contract standard.

Having said that, a 42 day DB is not really worth it -- unless your cash costs (or earns) you more.

For the record I was not the successful bidder at any of those auctions, so I didn't go through with it. Also there are legal issues regarding substitution of consideration -- especially if the contract is rescinded.

I certainly wouldn't go to an auction with a DP already prepared unless I was going to buy it at any cost. I'd have a pre-approval.

Paul Zag
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