A new survey has revealed that nearly half of Australians have attended an auction, but many don’t understand concepts such as ‘cooling off’ periods.
A survey of more than 2000 Australians conducted by an independent research company for law firm Slater and Gordon found that 48 percent of respondents said they had attended an auction in the past.
Across the country, men (54 percent) were more likely to have attended an auction than women (41 percent), and people in Victoria (60 percent) were more likely to have attended an auction than those in Western Australia (29 percent).
Most, however, had no intention of bidding, with 63 percent reporting they were simply there to watch. 21 percent said they had intended to bid and had sought legal advice, while nearly 15 percent said they had intended to bid but hadn’t sought any legal advice.
Alarmingly, 42 percent said they didn’t know that there would have been no cooling off period if they successfully bid at auction, while overall 13 percent did not understand the term ‘cooling off period’ - a mandatory period during which the buyer can change their mind about purchasing the property.
Younger generations were the least likely to understand what a ‘cooling off’ period was, with 33 percent of 16 to 24 year olds and 18 percent of 25 to 35 years old saying they didn’t know.
Slater and Gordon lawyer Robert Kern said the results were concerning particularly as there have been a number of huge auction results over the past few months and the market is starting to see auctions pick up again.
“For most people their home would be the single biggest financial commitment they would make,” Mr Kern said.
“In jurisdictions across Australia there is no cooling off period at auction.
“Basically that means that you can’t change your mind and any changes you want made to the contracts have to be done before the bidding starts.
“If you’re intending to buy at auction, or even think you might, you would want to do your research properly because, once you sign on the dotted line, you’re obliged to buy that property.
“Before going to an auction make sure that you do the full gamut of searches that you would do if you were buying through a regular sale – valuation, building and pest inspections, title searches, easements, building approvals, etc.
“For example if you’re planning on buying the house to extend or rebuild you need to make sure you have council approval, because if it turns out after the auction that you can’t there’s nothing you can do.
“In Victoria and NSW it’s more common to see a lot more pre-contract disclosure where many of these searches may have been done by the agent or seller, but in other states, including Queensland, it’s rare so it’s very much a case of ‘buyer beware’.
Mr Kern also said it was important to have solid finance in place before bidding at auction.
“For example if after the auction it turns out the property is worth more, or less, than what you were led to believe your financial institution may not being willing to provide finance.
“Ultimately, the onus is on the buyer to ensure that they are getting what they paid for.
“Taking the time to get advice before an auction is a much wiser strategy than getting lumped with a white elephant after the hammer falls,” he said.