Melbourne is widely regarded as one of the auction capitals of the world, a title that reflects the city’s main approach to property sales. So as well as deciding on your bid strategy and budget you need to have a plan inplace on how to pay the deposit on auction day if you are the successful bidder.
The deposit serves as a sign of your commitment to purchase the property and as auction properties are purchased unconditionally, this is the minimum amount you risk if you try to walk away from the deal.
Generally, the total deposit required is 10% percent of the purchase price. However, you may be able to agree with the agent prior to the day to pay a smaller amount with the remaining amount payable on the next business day.
Gone are the days of providing a Personal or Bank Cheque – we’ve moved on from having to do this. To pay the deposit nowadays, the main 2 ways to pay are:
1. Electronic Funds Transfer (EFT)
To pay the deposit via an online bank transfer via your banking app.
Be aware that you will mostly likely have a daily transfer limit less that is less than the deposit amount required. Find out in advance from the selling agent if you can do a partial transfer on the day of auction with the balance payable by the next business day.
To pay the balance you may need to physically go to the bank to complete the balance. The bank can transfer an unlimited amount (based on your available funds) via a Telegraphic Transfer (TT) – also known as Real Time Gross Settlement (RTGS). If you have a Relationship Manager or Personal Banker at your bank you maybe able to request the TT over the phone or via email.
It’s a good idea to send the agent a copy of all transaction receipts, as they may not see the money in their account until the next business day.
2. DEFT Auction Pay
There are a number of secure online platforms such as the DEFT (Direct Electronic Funds Transfer) Auction Pay system developed by Macquarie Bank which allows a direct debit of the total deposit amount on the day. The Agent and Buyer will receive immediate payment confirmations via email.
More and more selling agents such as Jellis Craig, Nelson Alexander and Mashal White are embracing this technology so find out in advance if this is an available payment option.
It is by far the easiest payment method as it only requires the purchaser to have their bank account details handy on the day.
It’s important to note that the specific payment methods may vary depending on the real estate agency, so it’s always important to confirm the payment methods with them prior to the auction day. Do not turn up with a bank cheque or a personal check on auction day without first discussing it with the selling agent you may find they are reluctant to accept it!
And whilst we haven’t seen it for many years carrying around large amounts of cash is alway best avoided.