Property 101: Do I need a cheque at auction?

ME Head of Home Loans, Patrick Nolan walks through the must-haves to bring along on auction 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,” says Nolan.

“And you’re expected to stump up a deposit – usually 10 percent 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 cheque

“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 is required for personal cheques.

Bank cheque

“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.”

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