Buyer paying via bank transfer hours after auction

Hi,

we are selling an IP in inner Sydney. One of the potential buyers has requested that she would make the money transfer on the auction day (this Saturday) and bring no bank cheque. Our solicitor advises against granting the request. Our agent says its not that rare.

Have any of you experience with this? What would you do? Loose a potential buyer, maybe? Hope for the best?

Nat
I have also created a poll

 

Can't you say via online transfer is fine but they need to do it then and there ... before they leave the premise? And show you the receipt. Most people would have online access on their phone.

Jason

 

The buyer should have the conversation in writing (ie email) with the selling agent to seek agreement on payment methods in advance of the auction (eg during the week leading up to it).
A pretty standard request in VIC is to pay $1k on the day via internet banking (and provide the receipt) and pay the rest via whatever means on the next available business day (and provide evidence of same).

Yes, if any money is being paid via internet banking on the day then the payment should be made via internet banking before leaving the premises and the selling agent should be given evidence of the transfer having been made (ie internet banking payment receipt).

Remember the following key points :

• Bank cheques take 3 business days to clear. So it'd take longer for the money to properly arrive than by permitting internet banking transfers.
• Ultimately, a person can bid at auction, win, then panic and run away. There is very little that the selling agent can do about it. I heard of an auction quite recently where this occurred. The selling agents were left with their jaws on the floor and begging the second-highest bidder to come back into the frey.
• Deadlines for each payment increment should be agreed upon in writing before the auction, and noted in the relevant place on the contract of sale.
• The moral of the story is try not to alienate those with genuine interest by making the payment methodology harder than it needs to be. There are legal avenues to remedy a situation if a person signs a contract of sale and doesn't pay the deposit within the agreed timeline.

 

Given that they accept personal cheques on a Saturday, that are not banked until a Monday, and then take 3 days or so to clear, I don't see a problem. However, I don't see a problem with doing the bank transfer at the fall of the hammer at auction, on an iPad either, which I see frequently. Why wait?

 

In NSW, the auctioneer by law, holds POA for both the vendor & the winning buyer. The auctioneer can sign for both if they have a change of mind. However, it would be a brave auctioneer that would do so in practice IMO as the legal fees to enforce would be huge - which is why they generally see if they can get the under-bidder to purchase instead.

 

I deleted my post because I thought it may have only been a Queensland thing without research. It appears other states have similar laws.

pinkboy

 

I discourage buyers from attending and auction with a cheque already prepared. The easiest way is to transfer a few thousand immediately via phone banking, then follow up with the balance via bank cheque the next business day.

The agent should also be asking for proof of identification from the purchaser and taking a copy of the details.

 

The buyer should just get a counter cheque. Problem solved.

 

Hi Natascha

Is there a reason you would not accept a personal cheque? It may be difficult to anticipate the deposit needed.

Good luck with your auction.

Regards
David

 

Wow... I had no idea that people actually expect someone to have a bank cheque on the day. So you mean that if there are 5+ registered bidders then you would expect every one of them to have a bank cheque drawn in the name of the agent's trust account for an amount of approximately 5% when they have no idea what the price will end up being or if they will even win the auction.

I bought at auction in Brisbane 4 weeks ago and I can assure you that I'd tell the vendor where to shove their property if they demanded this.

I payed via EFT on the following Monday. Most people have daily limits on EFT and these can't be lifted when the bank is closed on a weekend.

Auction clearance rates in QLD are under 50% because buyers here hate auctions. The need to have a B&P prior to auction and then expectations such as this will alienate all except the most experienced buyers. That's fine for development sites or high end properties but horrible for FHB property.

 

I once purchased a property for about $1.5m at auction with no cheque in Vic. I couldn't use internet banking to make the deposit as I was limited to $10k per day. So it waited until the next business day.

If you plan to use internet banking plan ahead and speak to the bank as you may have a daily transfer limit to consider.

 

Thank you all for your answers. It's really great to have such a knowledgeable community for support. Thx!

It seems the agent has convinced the buyer to set up her online banking on her laptop. Thx problem solved. Now it's only the nerve racking question how many people show up at the auction and actually bid

Nat

 

Good luck

 

EFT is fine, Auction or private treaty, there is no need to force to do it at auction either, as long as done on same day if a week day or first business day if auction is weekend.

You could take a CHQ that has no money in account

I would not do a bank cheque, trying to get one of them on Sat would be a feat, some banks do not open, some have no branches in the area you may be in & you do not know the amount.

 

We paid $1000 cash on the day and did a bank transfer. It had to be cleared by COB on the Monday. We also didn;t want to pay the full 10% so we offered a large rounded sum which the vendors accepted.
If a joint account, you can get around transfer limited by each person logging in separately and making a transaction.

 

There's usually a 20k limit on online transfers per account so it'll still be hard to pay the 10% deposit if the house is in Sydney or Melbourne

People usually accept 1k cash and the balance done via a bank cheque on Monday.

I recently bought using a counter cheque and didn't know such a thing existed couple of days before I purchased! You only need one, get it from a branch and carry it with you until you win an auction.

 

The transfer limit is per day, so you could make two transfers on the weekend (sat and sun) and a third on Monday if you need to.

 

Yes I realise that, but the buyer can pay something on the spot that will be fine

 

Another thing to keep in mind is that some banks disallow internet banking transfers on the weekend. U-Bank is in this category I believe.

 

I was once in a branch of the Commonwealth Bank and observed a very loud conversation between a customer and the banker that troubled me greatly. As far as I could gather, the banker was explaining to the customer that this was a blank cheque ready to go and if he won the auction on the weekend he should just fill in the amount. My eyes were wide with disbelief. Several people heard the conversation and the customer merrily wandered out into a packed shopping plaza with blank and possibly signed cheque in hand. He was fortunate that nobody that overheard the conversation about the blank cheque was the type of person to follow him and steal it from him. I don't want to spend brain energy thinking about what the precise situation was. I just thought it was a dangerous conversation to have out loud. It almost doesn't matter whether the blank cheque would have been usable to a would-be thief. The fact that someone may have thought it held value could have gotten that guy beaten up in the carpark.