Want to bid at auction this week but bank delaying loan

[maza]

Hi everyone.

There is a auction this saturday in sydney and there is a house im really interested in and want to bid on.

Problem is, there is a delay in the bank giving me the loan and they say it will take another few weeks.

Ok now, the problem is, the agent said i can give 5% deposit if i win at the auction.The thing is, im worried that the bank will not give me the laon or wont give me the loan in time.He said i will lose my 5% and i may be sued for the another 5%.

Should i just wait until the bank gives me 100% approval?

Is there any cooling off period after the auction?

Is that 5% i have to give at auction time compulsory?Anyway around this or my situation?

Any advice appreciated.

 

[josko]

Hi maza,

You should most definately wait for an approval from the bank. ESPECIALLY if you would like to bid at auction.

There is no Cooling Off period and you had better make sure you have the money to follow through to Settlement...or a very good Solicitor.

Regards JO

 

[Perp]

I don't know how agents get away with this "auction is the best method of testing the market price" nonsense, when so many buyers will be in exactly this position.

maza, there is no way around it. Only people who already have approval or who are paying cash can bid at auctions, or they take a risk that they'll get finance. It's a crazy way of selling property, because you so dramatically restrict your pool of buyers.

 

[Joe C]

Should i just wait until the bank gives me 100% approval?

Have you been pre-approved yet?

Banks generally won't give you unconditional approval until they have a signed contract of sale.

 

[Propertunity]

There is a auction this saturday in sydney and there is a house im really interested in and want to bid on.
Problem is, there is a delay in the bank giving me the loan and they say it will take another few weeks.

Generally speaking, all you need in the first instance is a pre-approval that gives you an indication that they will lend you up to $x. Most valuers will accept that the value of a property is what was paid at auction as it is an open market scenario.

There are exceptions. If the property is worth say $500K and the last bid was $510K and then you bid $600K and win - then you are not going to get the finance.

Ok now, the problem is, the agent said i can give 5% deposit if i win at the auction.The thing is, im worried that the bank will not give me the laon or wont give me the loan in time.He said i will lose my 5% and i may be sued for the another 5%.

The agent speaks the truth (this time) AND you can be sued for the difference if they have to sell for lower than you were offering to pay.

Should i just wait until the bank gives me 100% approval?

Yes, or find a faster bank. Weeks is ridiculous. Its just some backpacker typing numbers into a bank's calculator

Is there any cooling off period after the auction?

NO

Is that 5% i have to give at auction time compulsory?

Usually it is 10% but they'll accept 5% with prior arrangements

Anyway around this

Nope

 

[willair]

Should i just wait until the bank gives me 100% approval?

Yes there is no in-betweens..
this is the way it works in QLD..

All prospective bidders are required to register their name and address with the auctioneer prior to bidding. Satisfactory evidence of identity must be provided. All registered bidders will be issued with a numbered bidder’s card. No bid will be accepted from any unregistered bidder.
2. The highest approved and acknowledged bidder shall purchase subject to reserve and bidders are responsible for the recognition of their alleged bids.
3. Where in respect of any lot to be offered for sale Transmission by Death in favour of the Vendor has not been registered on the relative title by the Registrar of Titles as at the date hereof, such sale is conditional upon such transmission.
4. Terms shall be strictly cash and the Purchaser shall pay an immediate deposit of 5% of the purchase price and contract to pay the balance of the purchase price within 42 days from the date hereof, except that in any sale which is subject to the registration of Transmission by Death in favour of the Vendor, such balance of the purchase price shall be paid within 30 days following notification in writing by the Vendor to the Purchaser of the registration of such Transmission by death or within 42 days from the date hereof whichever is the later.
5. The Auctioneer shall determine any dispute absolutely and his decision shall be final and binding. He may resubmit any lot at his discretion to resolve any error, dispute or default.
6. No bidder shall advance less than the sum named by the auctioneer.
7. No bid shall be retracted and the auctioneer may refuse any bid.

​

8. The Vendor reserves the right to bid in person or by his auctioneer as often as he shall think fit and may withdraw the property at any time during the sale.
9. The Vendor and the Purchaser shall execute a contract prepared by the Vendor on the form of Contract adopted by the Real Estate Institute of Queensland including such special conditions as may be applicable in accordance with these Conditions of Sale.
10. The auctioneer is not responsible for the correct description, authenticity of, or any fault or defect in any lot and makes no warranty whatever.
11. The highest bidder for a passed in lot has the exclusive right to negotiate until the end of the auction or any other time specified by the auctioneer.
12. Time is of the essence in regard to these conditions.

13. No waiver of these conditions will be valid unless in writing by the

 

[tez]

Have you been pre-approved yet?

Banks generally won't give you unconditional approval until they have a signed contract of sale.

Thats the impression that I got. Banks wont give unconditional until you have signed, so the best case would be to get the preapproval and go from there I guess?

 

[drfunk]

its a ridiculous situation that I was in myself a few months back. Went to westpac (who I banked with for >2 years at this time), talked to their mortgage broker "You want a mortgage with us? Sure! No problem, heres a pre approval"
"Uh... can I get an approval up to a certain amount?"
"No, it doesnt work like that, but you'll be fine!"

Bought house at auction

Went back to westpac 'oh, we need this, and this, oh.. and we're not sure about this' ... et cetera for ~ 1 month. The most RIDICULOUS thing westpac made me do, was print out... two years of bank statements.... from westpac, as evidence for the application. Complete idiots imo.

Went to CBA who approved the homeloan within 1 day. Eventually went with ANZ (they took 3-5 days to approve) as I wanted my mortgage insurance waived.

So.. yeah, buying at auction is risky, especially if you are self employed. If you can help it, much better to buy via private sale

EDIT - Just as a footnote, the price of the property was ~half the maximum amount the banks were prepared to loan me.. so the difficulty with westpac was not even the income vs expense argument

 

[maza]

Thank you all for your great responses,much appreciated.