If you’re searching ‘buying property at auction risks in Brisbane’, you might already know that there are risks involved when making a real estate investment through auction.
By not having the time to inspect a property fully, you may end up with unexpected repairs and costs. You might end up searching for home renovation permits in Brisbane to fix issues that were not covered in the settlement.
There are also risks associated with bidding against other buyers and potentially driving up the price of the home you are interested in.
So before you get your chequebook out, let’s take a closer look at some of the risks involved in buying property at auction in Brisbane.
What is an auction?
An auction is a process where a property is sold to the highest bidder.
The bidding usually starts with the vendor, who sets a reserve price that must be met for the property to be sold.
The property is not sold if no bids are at or above the reserve price.
Auctions are usually conducted by licensed real estate agents and are advertised in the local newspapers and on the Soho platform.
What Are The Risks Of Buying Property At Auction In Brisbane?
Looking up homes for sale in Brisbane at an auction? Before taking the plunge, it is important to know the risks involved.
Some of the key risks of buying property at auction include the following:
1. Lack Of Due Diligence
Unfortunately, many people do not take the time to properly assess a property before bidding at auction, and this can lead to some nasty surprises down the track.
Often, buyers are under pressure to decide quickly and do not have time to inspect the property in detail or get a building or pest report.
This can lead to costly mistakes later on. Another thing to remember is that most properties sold at auction are sold as is.
This means you would be unable to get your money back if you discover any problems with the property after purchase.
So, it is important to be 100% sure that you want the property before putting in a bid.
2. Bidding Wars
It is no secret that Brisbane’s property market is booming, and with prices reaching record highs, buying properties at auctions has become an attractive option for many home buyers.
However, before you put in your winning bid, it is important to know the risks involved in this purchase.
Another danger of buying property at auction is the risk of a bidding war.
If there are several interested buyers, the price can quickly spiral out of control, and you may end up paying well above market value for the home you want.
So it is important to do your research and know what you are willing to pay before placing your bid.
3. Incorrect Property Information
The property information may be incorrect or misleading, leading to buyers making an uninformed decision.
Remember that the contract is binding, so you can not change your mind after signing it because you realise you have been given incorrect information.
For example, if you are told the property is a three-bedroom house, but when you get the title deed, it turns out it is a one-bedroom unit, you are stuck with it.
You can not back out of the sale or get a refund on your deposit.
So it is important to research and ensure all the information is correct before bidding on a property.
4. Stamp Duty Rates In Brisbane
Regarding stamp duty rates in Brisbane, it is quite competitive compared to other capital cities in Australia.
The current stamp duty rate for all residential property in Brisbane is 5.75%.
This is in addition to the property’s purchase price and is payable by the buyer.
There are a few exemptions from stamp duty, which include;
- properties purchased as part of a deceased estate
- properties transferred between related parties
- properties purchased for redevelopment.
However, most people will need to pay stamp duty when buying property at an auction in Brisbane.
5. Undisclosed Defects
One of the biggest dangers is that you may not be aware of any defects with the property.
These could be anything from major structural problems to hidden damage that can not be seen without taking the property apart.
If you are not confident in your ability to identify these defects, it is always best to get an inspection done by professionals before bidding on the property.
