Buying at Auction
Auctions can be intimidating, but with the right preparation, you can bid with confidence. Learn everything you need to know about buying your first home at auction in New Zealand.
Unconditional
No cooling-off or conditions
Fast Process
Settlement 30-45 days typically
10% Deposit
Payable immediately on success
Before the Auction
Get Pre-Approved Finance
You must have unconditional finance approval before bidding. Speak to your bank or mortgage broker to get a pre-approval letter stating your maximum borrowing amount.
Tip: Set your auction limit below your pre-approval amount to leave room for bidding. If pre-approved for $800k, consider setting your limit at $750k.
Conduct Due Diligence
Unlike private treaty sales, auctions are unconditional. You must complete all checks before auction day.
- Building inspection (essential - budget $500-800)
- LIM report (Land Information Memorandum - $300-400)
- Title search and legal review
- Review auction terms and conditions
Register to Bid
Contact the real estate agent to register your interest. You\'ll need to provide:
- • Photo ID (driver\'s license or passport)
- • Proof of funds/deposit (bank statement)
- • Solicitor details
- • Pre-approval letter
Set Your Limit
Decide your maximum bid before auction day and stick to it. Auction fever is real - emotions can lead to overpaying.
Golden Rule: Never bid above your pre-set limit. There will always be another property. Walk away if it exceeds your budget.
Auction Day
What to Bring
- Photo ID
- Bidding number (if pre-registered)
- Deposit cheque or bank transfer details
- Your maximum bid written down
The Auction Process
- 1Agent explains terms and conditions
- 2Auctioneer announces starting bid or invites opening bid
- 3Bidding continues in increments set by auctioneer
- 4Auctioneer calls "Going once, going twice..."
- 5Hammer falls - highest bidder is the buyer
Bidding Tips
Do:
- Bid confidently and clearly
- Use strong body language
- Bid in odd increments ($503k vs $500k)
- Take your time between bids
- Have a support person with you
Don\'t:
- Start bidding at your maximum
- Let emotions drive your bids
- Bid without finance approval
- Forget about additional costs
- Feel pressured to keep bidding
After the Auction
If You\'re the Successful Bidder
- 1.Sign the Contract - You\'ll sign the sale and purchase agreement immediately
- 2.Pay the Deposit - Usually 10% of purchase price, payable by cheque or bank transfer
- 3.Notify Your Lawyer - Send them the signed contract straight away
- 4.Arrange Insurance - Property must be insured from auction day
- 5.Prepare for Settlement - Usually 30-45 days later
If the Property Doesn\'t Sell
If the reserve price isn\'t met, the property is "passed in." The highest bidder usually gets first right to negotiate with the vendor.
This can be a good opportunity - you may be able to negotiate conditions like finance or building inspection clauses that aren\'t available at auction.
Important Warnings
- !Auctions are unconditional - You cannot make the sale subject to finance, building inspection, or any other condition. If you win, you must complete the purchase.
- !No cooling-off period - Unlike private treaty sales, there is no cooling-off period for auctions. You cannot change your mind.
- !Deposit is non-refundable - If you cannot complete the purchase, you will lose your 10% deposit and may face legal action.
Common Questions
Can I bid if I haven\'t sold my current home?
Yes, but you need to have unconditional finance that doesn\'t depend on selling your current home. Bridge finance is an option, but speak to your bank first.
What if I can\'t attend the auction in person?
You can usually bid by phone or give someone power of attorney to bid on your behalf. Arrange this with the agent before auction day.
Can I make an offer before auction?
Yes, you can make a pre-auction offer. If the vendor accepts, the auction may be brought forward or the property may be sold prior. Your offer should be unconditional.
Ready for Your First Auction?
Make sure you\'re fully prepared. Speak to a mortgage advisor to get your finance sorted before you bid.