Published at: 6/21/2016 3:29:21 PM
Buying at auction comes with plenty of fast-paced action but it also brings uncertainties about how to pay on the day.
As a quick refresher, when you make the winning bid at auction, you immediately enter into a binding contract. There is no cooling off period (so it pays to have your home loan pre-approved). And you’re expected to stump up a deposit – usually 10% of the sale price, before you head off to celebrate.
Sure, you could haul the cash along in a briefcase, but there are easier and safer options to pay on the day.
The first rule of thumb is to speak with the selling agent. Confirm that you only need a 10% deposit, not more, and enquire about which payment options are acceptable.
Personal cheques can certainly be handy at an auction. The beauty here is that you can make the cheque out to the exact figure of the deposit as soon as you make the winning bid. Be sure to confirm if any personal ID required for personal cheques
Paying by bank cheque is a preferred option among many vendors however the downside is that most financial institutions are closed on weekends or after hours, when most auctions are held. That means arranging your bank cheque in advance with a value of 10% of the highest price you are willing to pay.
Without knowing the winning bid, your bank cheque could end up being more than a 10% deposit. It’s not the end of the world, it just means the additional cash is now tied up in your new home. The other weak spot is that you’ll pay a fee to have a bank cheque drafted. If you’re unsuccessful at several auctions the cost will start to add up.
Talk to your ME mobile bank manager about the best way to pay your deposit at auction.