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Buying at
auction.
When the hammer falls, you are committed. No conditions, no cooling-off, no way out. Preparation is everything.
The critical difference
When you are the winning bidder at auction, you are immediately bound to an unconditional contract. There is no cooling-off period, no opportunity to negotiate conditions, and no right to change your mind. If you cannot complete the purchase, you lose your deposit and may face a claim for damages.
How property auctions work.
Understanding the process helps you prepare effectively.
Marketing period
Properties are usually marketed for 3-4 weeks before auction. During this time, buyers can view the property, conduct due diligence, and arrange finance. This is your window to do everything.
Pre-auction offers
Vendors may accept offers before auction day. These are usually unconditional offers that entice the vendor to sell early. If you make a pre-auction offer, you must be ready to proceed immediately.
Auction day
The auctioneer opens bidding. Bidders compete until no one is willing to bid higher. If the reserve price is met, the property is sold. If not, it is passed in and negotiations may follow.
Contract formed
The winning bidder signs the sale and purchase agreement immediately. A deposit (usually 10%) is payable on the day or within 24 hours. The contract is unconditional from that moment.
This is the point of no return. Once the hammer falls and you sign, you are legally committed.
Settlement
Settlement occurs on the date specified in the contract, usually 20-30 working days after auction. You must have finance arranged and be ready to complete.
Your preparation checklist.
Because auction purchases are unconditional, you must complete all your due diligence before you bid.
Get finance pre-approved
You need unconditional finance approval before auction day. A pre-approval letter is not enough - you need confirmation the lender will fund this specific purchase at your maximum bid price.
Commission a building inspection
A thorough building report from a qualified inspector must be completed before auction. If the report reveals issues, you cannot make your bid conditional on repairs.
Get a LIM report
Order this early as it can take 10 working days. Issues like unconsented work, flood zones, or contaminated land cannot be raised after you bid.
Have your lawyer review the title
Your lawyer should review the title, easements, covenants, and any encumbrances before auction. Issues must be identified now - not after you have committed.
Set your maximum and stick to it
Determine the absolute maximum you are willing and able to pay. Once set, do not exceed it under any circumstances.
Review the auction documents
Have your lawyer review the auction pack including the sale and purchase agreement before auction day.
Register to bid
Most auctions require registration before you can bid. You will need ID and to sign documents acknowledging the auction conditions.
Bring someone to keep you honest
Auction fever is real. Bring someone who will hold you accountable to your maximum.
The cost of due diligence - these investigations cost money, even if you don't win. But compare these costs to losing a 10% deposit.
Auction vs private treaty.
When you buy at auction, you give up significant protections.
| Aspect | Private Treaty | Auction |
|---|---|---|
| Finance condition | Usually included - cancel if declined | Not available - must have unconditional approval |
| Building inspection | Usually conditional - cancel if issues | Must be done before at your risk |
| LIM condition | Usually included - cancel if issues | Must order before - no protection |
| Title review | Often conditional on solicitor approval | Must review before - no escape |
| Cooling-off period | Conditions provide effective cooling-off | None - immediately binding |
Auctions in Hawke's Bay
Auctions are common in Hawke's Bay, particularly for properties in desirable locations like Havelock North, Taradale, and the coastal areas.
Cyclone damage history: Following Cyclone Gabrielle, carefully check flood zone information in LIM reports and ask about any repairs or remediation work
Rural properties: If buying a lifestyle block at auction, water rights and consents are critical - have these reviewed before you bid
Seasonal patterns: Auction activity tends to peak in autumn and spring
Key Takeaways
Auction purchases are unconditional and immediately binding - there is no cooling-off period
All due diligence (finance, building inspection, LIM, title review) must be completed BEFORE you bid
Set a maximum bid based on your finance approval and stick to it - auction fever is real
If you cannot complete an auction purchase, you lose your deposit and may be sued for further losses
In Hawke's Bay, pay particular attention to flood zones and cyclone damage history
Related Guide
Follow our step-by-step guide through the property purchase process, including auctions.
Read the First Home Buyer's GuideRelated Reading
Buying or selling a mortgagee sale property
Mortgagee sales can offer opportunities for buyers but carry unique risks. Understand the process, your rights, and what protections you need.
Vendor Warranties when selling property
When buying property, vendor warranties protect you from hidden issues. Understand what the seller promises about notices, building compliance, chattels, and third-party rights.