It was with great media coverage that the auction of a property on the North Shore of Auckland took place last weekend (Sunday 26 Oct). The property was advertised at a $1 reserve and eventually “sold” for $685,000 – apparently an independent valuation undertaken within the past 12 months had valued the property at $1.03m.
Well the salutary reminder is the classic phrase Caviat Emptor – let the buyer beware! – the NZ Herald is reporting this morning that the buyer cannot identify the vendor!
The circumstances from the media coverage are as follows:
- The property was a private sale – no agent was involved
- A licensed auctioneer presided over the auction
- The highest bidder “won” the auction
- The winning bidder “apparently” signed a contract with the vendor before he was engulfed by the hordes of assembled media – upon the completion of the interviews the vendor had disappeared – and no contact has been made subsequently, and the buyer has no contract
The story may yet play out, however there are a couple of very salutary points to highlight from this incident:
- Property purchases are serious matters and legal contracts verified and checked by lawyers are a critical part of the process
- The exchange of contracts is not a phrase – it is an act, a buyer and a seller needs copies of contracts as do their lawyers
- Without the services of a licensed real estate agent – who is there to ensure the process of paperwork and compliance activities are undertaken?
- Having an licensed auctioneer call an auction does not provide for any control of the sale contracts. Auctioneer are covered under a different Act from real estate agents. Auctioneers that call property auctions do not need to be licensed real estate agents. Auctioneers are a profession as is real estate – they should be engaged with a clear view of each of their respective roles
- The heat of the moment of purchase at an auction or a traditional sales agreement time can be frought with emotion – in the heat of the moment, don’t forget to cross the T’s and dot the I’s!!