Jan 19, 2021 4:10:26 PM

A Guide to Buying at Auction

Topics: Selling, Mortgage Advisers, Home Loan 0

When it comes to buying property in New Zealand, many people find the auction process quite daunting. Being prepared by attending several auctions before you bid and doing your research can help you feel more confident. As property sales by auction are unconditional, so there are a few important steps you’ll need to take before bid. If you’re new to the auction process, and unsure where to start, check out this handy guide.


Preparing for auction

Once you find a property you like, research it thoroughly. Go online and visit the property, checking out the house, land and surrounding neighbourhood.

Get in touch with your lawyer or conveyancer to get some of the information you’ll need on hand before the auction. This includes:

• The title and council information
• LIM report
• A property inspection or bank valuation
• An idea of the value of the property

You’ll also need to register your interest to bid at the auction with the real estate agent, and review and sign some legal documents. These include the auction rules and a sale and purchase agreement, which documents the purchase deposit that will be paid at the auction, the settlement date when the remainder of the sale price is payable, and any other information required, like a land information memorandum (LIM) or building inspection report.

Confirming your finances

Because auctions are unconditional, you must have your finances in place up front before you can bid. If you win the auction, you’ll be required to pay the purchase deposit as per the sale and purchase agreement.

Talk to your Mortgage Express adviser about pre-approved lending so you can bid at auction up to a fixed amount. These are the documents you’ll need on hand when you meet with your mortgage adviser to discuss pre-approved finance:

• Proof of identification – Preferably Passport and or Driver’s License
• Address Verification (bank statements showing address or utility bill held in your name)
• 3 Months’ most recent and consecutive bank statements for your current account
• Evidence of deposit (Bank statement/Confirmation of KiwiSaver withdrawal/Gifting letter)
• Evidence of income (3 Pay slips/Copy of employment Contract, or for self-employed end of year financial statements)

Once your finances are in place - your borrowing capacity has been calculated and you have a loan pre-approval – you’re ready to bid at auction.

Auction day

Property auctions are usually held subject to a reserve price, which means the property is not for sale until the reserve price has been reached. Any bid over the reserve price could be the one that buys the property. 

If the property fails to reach the reserve price and negotiations between the highest bidder and vendor do not result in a sale, the property is passed in and it may be open to the market so everyone has opportunity to submit an offer of purchase.  

If your bid is the winning bid, you’ll be asked to sign a sales agreement and pay the deposit. Remember, there is no cooling off period with properties bought at auction, so it’s vital you do all of your due diligence before you bid.

For more useful information on buying or selling property at auction, check out this Harcourts’ article.

Buy with confidence

Property sales by auction may be daunting for many people, but for buyers they offer a few advantages. Not only do you know who you’re competing against and all negotiations are done in the open, with properties sold at auction you’re assured of buying a property for its true market value. 

If you’re considering buying at auction, get in touch with our team today to get your finances in place so you can buy with confidence.


While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.

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