Top 5 tips for buying property in Victoria

Introduction

Spring is the busiest time of year for the Victorian property market, with longer days, blooming gardens, and an increased number of listings attracting competitive buyer interest. But with more homes going to auction, purchasers often feel pressure to act quickly and decisively, without considering how auctions come with unique legal and financial risks that differ from private sales. Understanding these risks before you bid can influence whether you make a successful purchase or a completely avoidable mistake.

Our Top 5

Here are five things to keep in mind if you’re thinking of purchasing a property at auction in Victoria.

1.      Remember there is no cooling off

In Victoria, when you buy a residential property at auction, you waive the usual three business day cooling off period that applies to private sales. The moment the auctioneer’s hammer falls, you are legally bound to complete the purchase. This means that if you haven’t done your due diligence beforehand (e.g., reviewing the contract, arranging finance, etc.), you could find yourself locked in. If you change your mind after signing the contract, the vendor will be entitled to your full deposit and potentially damages, too.

2.      Arrange your finance in advance

The Sale of Land Act 1962 (Vic) prevents you from making your auction bid subject to finance, so overcommitting can lead to serious financial consequences. If your lender can’t settle, you will be in breach of contract and may face legal action on top of losing your deposit. Make sure your lender has provided you will full and formal finance approval (pre-approval won’t cut it), unless you are in a position to self-fund the purchase.

3.      Contract can’t be conditional on building or pest inspection

Auction contracts prevent you from purchasing subject to building and pest inspections, so you can’t cancel the contract after auction based on these defects. If you’re concerned about the property’s condition, you should arrange these inspections and reports before the date of auction. That way, the results can inform your decision on whether to bid (and how much to bid).

4.      Review the contract and vendor statement early

The Contract of Sale and Section 32 Vendor Statement should be made available for you to review before the auction. These documents will include crucial disclosures about the property, like zoning, planning permits, easements, and owner’s corporation fees. You should have a property lawyer review them before auction because you can’t re-negotiate after you sign on the dotted line. For example, if you're dreaming up plans for a renovation or extension, hidden issues like a planned re-zoning, an easement along the edge of the property, or defective building works from the previous owner could create immense disappointment and financial burden to you. A pre-auction legal review can identity these risks to you before you're stuck with the property, warts and all.

5.      Know what deposit is required and when

Don’t let the adrenaline rush of bidding blind you to the financial consequences – if you’re the highest bidder, the full deposit amount (typically 10% of the purchase price, or 5% for first home buyers) is payable on the spot. Alternative deposit arrangements (like a reduced deposit or delayed payment) would need to be approved by the Vendor beforehand. Failure to pay the deposit can cost you the deposit and the property, plus expose you to legal action. So, always confirm details of how and when the deposit will be paid ahead of time.

Conclusion

Overall, the competitive nature of an auction is designed to get you acting first and thinking second. But buying at auction is legally binding and can involve significant financial risks if not carefully thought through. Treat auction day as the last step, not the first, and let us help you complete your legal homework early so that you can bid with confidence.

How Sharrock Pitman Legal can help?

Buying property is likely to be one of your  biggest investments. Whether you’re eyeing off a new plot, house and land package or an existing dwelling, your first step should be to seek legal advice from expert lawyers. As Accredited Specialists in Property Law, our experienced team of lawyers can assist with contract reviews, sale and purchase guidance, and solutions when things go awry.

Please do not hesitate to contact us on 1300 205 506 or email sp@sharrockpitman.com.au.

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The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

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