Over the past few years the real estate market has been running hot. During these times, a substantial increase of auctions are held and properties are sold by the hundreds every weekend. But, if you buy, is there an auction cooling off period?
In short, the answer is no. The law stipulates that if a property is purchased under the hammer at an auction, there is no cooling off for the buyer. In fact, a purchase made 3 business days before or after the publicly advertised auction date, a buyer does not have a cooling off option. Hence, one of the reasons why many agents and sellers push to go to auction.
This means, that if you purchase at auction, or 3 business day prior or after the auction, you have entered into a legally binding contract with the seller to purchase the property. If you are not able to purchase the property or have a change of heart, the only way out is a mutual agreement made between buyer and seller and exchanged through legal representation. In many cases, if a buyer backs out of an unconditional contract, they will lose the deposit, usually 10% of the purchase price.
If you are thinking of buying at auction, make sure you have taken the enough time to think about your purchase. Ensure that it is the right decision and you are happy to move forward. There is no room for buyer’s remorse in these situations and if you find yourself thinking twice, it may cost you a lot of money just to get out.
The following advice is of a general nature and intended as an opinion and broad guide. For all legal, financial or real estate advice you should obtain independent professional advice to do with the specific nature of your circumstances before making any legal, financial or real estate decisions.