Disclaimer:
The information on this website is for general guidance only and does not constitute financial or investment advice. Always do your own research and seek personalised advice from a qualified financial adviser or mortgage adviser before making financial decisions. All investments carry risk and past performance is not indicative of future results.
Key Takeaways
- Auction purchases are usually unconditional, so due diligence needs to happen before bidding.
- Confirm finance with your lender for the specific property before auction day.
- Check insurance availability for defects or natural-hazard issues before bidding.
- Check KiwiSaver eligibility and provider timing early if you plan to use KiwiSaver funds.
- Get legal advice before signing after a passed-in auction or back-up-offer negotiation.
The team at Schnauer & Co's have put together a resource toolkit to highlight some of the common misconceptions that some first home buyers have. Part 4 will detail the auction process and some of the risks associated with buying at auctions.
Purchasing a Property at Auction
Auctions are one common selling method in New Zealand. A property is offered for sale through an auction process and, once the seller's reserve is met and the successful bid is accepted, the buyer will usually sign the auction sale and purchase agreement and pay the purchase deposit as soon as the auction is over. For a broader overview, see our guide on what first home buyers need to know when buying at auction.
Critical: auction purchases are usually unconditional. Before bidding, review the auction documents with your lawyer or conveyancer, complete the due diligence you need, confirm finance with your lender, and check whether any property issue could affect insurance or lender approval.
Different selling methods create different timing and condition risks. Before signing any agreement or bidding at auction, useful checks include:
Before Attending an Auction:
- Get legal advice before signing any legally binding contract or auction document
- Confirm your finance position with your lender before the auction, including whether the specific property is acceptable security
- Read the fine print on any loan pre-approval documentation and ask your lender what still needs to be satisfied before settlement
- If a valuation, LIM, title review, or building inspection is relevant, ask your lender, adviser, lawyer, or conveyancer what they need before auction day
- Check whether any defects or natural-hazard issues could affect your ability to obtain insurance before bidding
KiwiSaver Considerations:
If you plan to use KiwiSaver, check eligibility and timing early with your KiwiSaver provider. First-home buyers usually apply through their scheme provider, while Kāinga Ora is involved for previous-home-owner determinations. Processing and payment timing depends on the provider, the application type, and complete supporting documents, so do not assume funds will be available for an auction deposit without confirming the process first.
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If a Property Passes In:
If a property passes in at auction and you want to negotiate or make a back-up offer, get legal advice before signing. Official guidance notes that auction terms and conditions may continue to apply for a period after a passed-in auction, which can mean offers remain unconditional and use the auction sale and purchase agreement.
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Need personalised guidance?
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Have a question about this?
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