Thinking of making an offer. Need some advice.

[Compleks]

Hey everyone, hope you're all well.

I have a few questions and would appreciate any advice as well.

I have been looking at apartments for my PPOR, in St Kilda, Vic. Most of these properties are going to auction.
A few things I have noticed from the inspections I have attended.

- Rarely does the realtor have information on strata fees / council rates / or what the place is currently rented for. For the most part they just seem to estimate these figures or say they will get back to you.

- Non of the properties have had the section 32 or contract of sale available. They all seem to delay this till as close to auction day as possible. Is there a strategy behind this? I imagine there must be a reason for this, I just can't think why.

I am genuinely interested in one property in particular. It is listed well below what it should sell for, but I assume they just want to get as much attention as possible.
I would like to make an offer pre-auction. But from what I have heard the vendor is pretty keen to take the property to auction (unless that's just another strategy on the agents behalf?).
I'm not sure what sort of ball park to make an offer in and was planning to just ask the agent what he thinks the vendor would consider, then offer a little less if it's within my budget.

I don't have much knowledge on the auction process.
Is there still a 3 day cooling off period on bids made at auction?
Can you still add a finance and building/pest inspection clause, or does all of this need to be sorted pre-auction?

At what stage do I have a solicitor/conveyancer look over the contract?? Wouldn't that be something to have done prior to the auction?

Sorry for all the questions. I haven't been through an auction before, so this is all a bit new for me.
Any help would be greatly appreciated.
You guys/girls rock, thanks!

 

[The Y-man]

I don't have much knowledge on the auction process.
Is there still a 3 day cooling off period on bids made at auction? NO
Can you still add a finance and building/pest inspection clause, or does all of this need to be sorted pre-auction? NO. Must be all done prior

At what stage do I have a solicitor/conveyancer look over the contract?? Wouldn't that be something to have done prior to the auction? Must be all done prior

That's one reason I prefer to sell at an auction - buyer is locked in....

The Y-man

 

[Compleks]

Thanks Y-man.
I thought that was the case. The agent I spoke to was quite new and had told me otherwise, good thing I double checked.

The section 32 still isn't available and the auction is in 5 days.
What exactly do I need to have the lawyers look at? (section 32 and contract of sale?) Should the contract of sale be available at this stage??
They really like to leave it all to the last moment...

So to clarify!
Before the auction, I need to have all property/building/pest inspections done.
I also need to have my solicitor/conveyancer look over the contract of sale and the section 32.
I also need to get finance pre-approved.

Is there anything else I need to be aware of?

 

[Aaron_C]

Pre-approved finance means nothing but you should get an idea of what you can/can't afford according to your broker. Auction is serious business so make sure that you do not regret the purchase as you have to complete. Best of luck.

 

[CapnBloodbeard]

I would get finance preapproved, but it doesn't really help you, so some argue it's pointless.

That's one of the ridiculous things about an auction - you have to promise to spend some large sum of money, with no way out, without actually knowing if you have that money.

And nobody sees a problem with this system?

Anyway, no cooling off period, so get everything done before. That's what sucks about auctions - each one you bid at costs you a building inspection.

not having the s32 5 days beforehand is pretty appalling, IMO. Makes it real hard for buyers to make an informed decision. You want the s32 before even looking at a building inspection, IMO.

Surprised they don't have strata fees etc, ever one I've come across has had that ready.

If you make a preauction offer you can try to put clauses in there, but almost certainly any clauses that could lead to the contract being terminated will be refused (eg conditional to finance).

Have you attended a few auctions as a spectator?

You're right that the property could well be deliberately listed under what it should go for to drum up interest. Just have a think about what your budget is, what you think it'll go for and whether it's worth going for it or not. Sometimes bargains can be found at auction.

 

[Peter_Tersteeg]

There are plenty of occassions when you should definitely get a pre-approval prior to an auction. A prime example of this would be a high LVR loan for a 40sqm appartment.

Neither of these items is a serious issue in itself, but if you start to combine several small challenges, it can mount up and cause an application to be declined. With these two paremeters the pool of available lenders is more like a pond, so it's better go to the auction confident in your finance.

 

[Compleks]

I just got the Section 32 today.

Noticed there is a clause on the front page stating that any offer accepted within 3 days of auction will not be allowed a cooling off period.

Should I get the building inspection first or have the section 32 looked at first?
I remember legal fees for my first property were over $1k. Surely people aren't paying that every time they want to bid at an auction??

Either way there isn't much time. I will have to try and get it done asap, then maybe make an offer if all is looking good.

This section 32 is giving me a headache...

 

[The Y-man]

I just got the Section 32 today.

Noticed there is a clause on the front page stating that any offer accepted within 3 days of auction will not be allowed a cooling off period.

Should I get the building inspection first or have the section 32 looked at first?
I remember legal fees for my first property were over $1k. Surely people aren't paying that every time they want to bid at an auction??

Either way there isn't much time. I will have to try and get it done asap, then maybe make an offer if all is looking good.

This section 32 is giving me a headache...

Why is it giving you a headache? They are usually pretty straight forward unless you are buying an unusual property. Get it to your lawyers for a quick once over, get the inspection done at the same time.

No, the legal fees are when you actually buy - just getting a contract checked shouldn't be more than a few hundred (and it should get cheaper once you've bought a few properties through the same lawyers)

Unlikely they will accept an offer prior to the 3 days before auction (we didn't - couldn't risk cancelling the auction just for someone who might pull a building inspection clause or finance clause).

If you are seriously going t put in an offer prior, make it strong (i.e. same as auction condition - unconditional)

The Y-man

 

[Compleks]

Why is it giving you a headache? They are usually pretty straight forward unless you are buying an unusual property. Get it to your lawyers for a quick once over, get the inspection done at the same time....

Thanks Y-man.
Contracts have been looked over by the solicitor. The headache is all the legal jargon and the way they write everything. My simple brain just has a hard time comprehending it.
Building inspection is getting sorted now.

If it comes back clean I will make an offer.
Fingers crossed.

 

[Aaron_C]

The headache is all the legal jargon and the way they write everything. My simple brain just has a hard time comprehending it.

You just need a good ******** sifter. Whenever you see a negative (like a 'not'), mark it down. At the end of the sentence, cross out the negatives so a double negative becomes a positive.

"It is not unexpected for this to occur" --> "It is expected for this to occur"

 

[The Y-man]

"It is not unexpected for this to occur" --> "It is expected for this to occur"

Lucky it's not written in Legal Gen Y

"It is not unexpected for this to occur not, but."

The Y-man