Month: July 2020

8 must know terms if you’re buying at auction

Auctions can be fast-paced with bids flying to and fro. Increase your chance of buying your dream home at auction by understanding these key auction terms.

Bidders Guide

Auctions can be a huge thrill ride, no matter what side of the transaction you are on – but you want to be able to keep up with what is going on! Auctions can be fast-paced with bids flying to and fro – by getting clued up on these key auction tips, you will soon be able to bid it out with the best on the block.

The bidder’s guide is a document that must be provided to bidders by the selling agent before an auction. It gives information on how to register for auction and what paperwork needs to be filled out, the relevant privacy laws and the rules and regulations of the auction. Make sure to get one of these before you start to seriously plan out your bidding!

Inspection

Usually beginning about half an hour before an auction, the inspection period is important for anyone seriously considering getting in on a property at auction. It isn’t just a final chance to see the property up close, it is also an opportunity to get a final look at the relevant documents for the home, such as the terms of settlement – as Consumer Affairs Victoria (CAV) says, you won’t be able to change these if you win the auction.

Reserve

One of the most crucial terms, the reserve is effectively the point at which the auction becomes “live”. If bidding does not go over the reserve then the property generally does not sell. However, once bidding goes over a reserve price the property is on the market and a winning bid is binding, so make sure you don’t over-extend your budget or get carried away in the heat of the moment – in some states there is no cooling-off period, which is a set amount of time in which you can back out of a deal. We buy houses in Dubuque

Rises and Advances

This is the amount by which bids increase during an auction, and according to CAV are usually dictated by the auctioneer. They could be $500 or $5000, and do not necessarily have to be adhered to – but the auctioneer can reject your bid if they think you have not advanced the bidding by enough.

Vendor & Dummy Bids

It’s important to understand the term vendor bid and the difference between it and dummy bids.

Vendor bids are a single bid made by the auctioneer on behalf of the seller. The purpose of this bid is to help the property achieve its reserve price.

The auctioneer is entitled to bid once on behalf of the seller. If this bid is to be made during the auction, the arrangements for making the bid must be set out in the rule displayed before the auctions starts and the intention to make a bid should be announced by the auctioneer at the start of the auction.

A dummy bid on the other hand is a false bid made by a non-genuine buyer. All dummy bids are illegal and attract significant penalties for the vendor, the dummy bidder and in some cases the agent if it can be proved they solicited the bid.

On The Market & Passed In

During the course of the auction, the auctioneer may stop the proceedings and say they are seeking advice or instruction from the vendor. This gives the auctioneer time to discuss the progress of bidding with the vendor.

If the bidding has reached the reserve price, or is close, the auctioneer will ask the seller if they are willing to sell the property for the highest price. If they are, the auctioneer will announce to the crowd that the property is on the market or rather that it will be sold to the highest bidder.

If the bidding does not reach the reserve price or a price the seller is happy with, the property may be passed in. In this case the highest bidder would be given the first opportunity to negotiate a sale with the seller.

There is a lot to take in at the auction yard, and one of the best ways to learn the ropes is to get down and see some auctions yourself. You could contact a local real estate agent to find out where the next one is happening in your area to get in and get researching.

The importance of Landlord insurance

As with most investments things can go wrong, damage can be caused by tenants accidentally or perhaps intentionally, pets can damage properties, plumbing can break or your property may not be rented for a period of time leaving you exposed to rental shortfall. Protecting your asset is the best way for investors to secure their financial and capital growth.

Carol Peach from Coverwise, has seen first-hand the impact not having insurance, or having the wrong insurance cover, can have on a landlord and the big out of pocket expenses they are expected to cover immediately.

She said “A property manager on a regular site inspection found a tenant, suffering from a relationship breakdown, had maliciously destroyed his rental apartment causing $44,000 worth of damage!”. The landlord was not insured with the correct policy and had to find an enormous amount of money quickly to fix the destruction and to protect his asset.

She said “Whether it be because of personal hardship, redundancy or job loss, illness or relationship breakdown things can change quickly with tenants and they may not be able to pay their rent leaving the landlord exposed”.

Additionally “many landlords are not aware of the intricacies of strata law and the fact that they may be held responsible for an injury inside the premises, if it can be proven that negligence on behalf of the landlord or the property manager caused the injury.”

She said “many landlords believe they are covered under bundled insurance / home loan policies so it’s critical to read the fine print of these policies as you may find you are not covered for everything you need to be, therefore exposing yourself to unnecessary risk.” Carol urges all landlords to check their insurance cover now as you don’t want to find out you’re not covered when it is too late!

A well designed insurance policy can protect you from lawsuits by tenants for injuries or from losses to your rental property caused by everything from fire and storms, to rental arrears…all the way through to illegal drug labs, tax audit and covering the costs to change locks.

Whilst insurance premiums vary, you should expect to pay less than a dollar a day depending on state premiums, but considering this expense is tax deductible and how much you would have to pay for unexpected repairs or issues if you weren’t covered, it is an important investment.

Protect yourself and your investment by arming yourself with the right kind of insurance. It may seem like an unwelcome extra expense, but you will be so grateful you have it if and when things go wrong.

Proactive property maintenance

  • Whilst insurance is critical so too is ensuring your property is maintained to the best standard possible.
  • Use a documented checklist to inspect the premises and fix any problems before new tenants move in.
  • Encourage your tenants to immediately report if they have any security or safety concerns with regards to your property or the common areas such as entrance ways, garages, fire stairs etc
  • Ensure you keep a written log of all tenant complaints and repair requests and detail how and when the issues were fixed
  • Make sure you fix any urgent repairs as soon as possible and if they are safety issues address these within 24 hours.Keep your tenants informed as to how and when the repairs will be made
  • Two times a year provide your tenants with a checklist to report any potential safety hazards or maintenance issues that may have not been addressed. Make sure you use this checklist when you personally inspect the property once a year
  • Ensure your repair and maintenance procedures are clearly set out in the lease or rental agreement.