What happens when you sell at auction,deposit cheque bounced

Ok, it hasn't happened yet. My brother sold his investment property last Saturday by auction.Judging by the way the buyer dressed and spoke, he had a bad feeling that his 10% deposit cheque is going to bounce. A few questions:
1. What happens if the cheque really bounces and the buyer fails to settle? My understanding is real estate agent fees are based on sold property not settled property and My bro will still be liable.
2. What are my bro's options? To sue the buyer For real estate agent's fee, but also legal fees and compensation?
Anyone with such experience? I know most people will say wait for few days and see what happens with the cheque but has this happened to anyone you know? And what was the outcome?

 

The agent will have taken a copy of the bidder's ID (registration for bidding at auction is mandatory in NSW).

 

Ha, I'm kinda curious about what a cheque bouncing guy looks and speaks like.

 

Oh we know who the buyer is. We got all his details. Not my point.What if he really doesn't have the fund or changed his mind and deliberately not settle or let the cheque bounces?

 

You need to provide sufficient identification at auction and certainly if he has signed a contract of sale post auction you should know exactly who he is? Therefore he is liable for the purchase, or will be liable to forfeit the legally binding deposit as per the terms of the contract and you go on to tell it to the next guy with that in the back pocket...

 

The place will be sold again. Wait and see. Unlikely to happen.

 

This is an honest question(s)...

Do people still use cheques in Australia?
Is that how it is usually done at auctions? You pass over a 10% deposit via a cheque? That's sounds so archaic. I'd have thought everybody would deposit electronically into the REA's Trust account. Huh. Old school...

 

Normal process... many people don't have cheque books anymore so they do it via bank cheque etc

 

For sure he is liable, but without having even the 10% deposit if the cheque bounces, my bro still has to pay the real estate agent fees, solicitor fees etc not to mention time wasted, time off work and to go through the whole process again, and legal fees if he is to sue the buyer.

 

1. This happened to a forum member a few months ago. You would need to either

a) try to force the existing one to settle, or

b) find a new buyer

option a) might be pointless and costly.

Once the property is resold you would then sue the buyer for the 10%, plus legal, agents costs and any shortfall on the sale.

Whether you are liable to the agent for the commission will depend on the terms of the contract. I make commission payable only if a settlement happens, but some agree to pay for a contract being entered.

2. See above.

 

Oi.

 

The settlement is for 60 days. The cheque will bounce in 3 days. When can my bro starts looking for another buyer? As soon as cheque bounces and buyer wouldn’t pay the 10% or after 60 days?

 

I haven't seen your contract. you should seek specific legal advice, but you would probably be able to terminate if the deposit isn't received within a certain time.

 

I once knew someone who dressed impeccably, was well respected and liked in the business community.

The only thing that bounced more than his cheques were his suppliers and employees after they received their cheques....

 

The second richest guy I know wears the same dirty old white overalls (different pairs of but look the same) every day. Looks like a homeless painter. The richest guy I know wears shorts and tee shirts everyday and drives a beat up old ute around most of the time (though he does have toys in the garage).

 

Never pre-judge.

Hehe, reminds me of a job I did many years ago when I was doing Mystery Shopping. The brief was "Dress up so that you look like a Millionaire" as you had to look at some real estate, and you 'needed to look like you could afford it'. There was a forum that all the mums would talk about these kind of 'high end' jobs & most of them were too intimidated to do them. Of course, I just went as myself.....and yes, I could easily have afforded the product at the time.

 

Can you even pay the deposit at auction with a personal cheque?

I’ve only heard of bank cheques being acceptable (for a pre-arranged deposit amount if successful).
Marg

 

Yes, we do it all the time. Many of our Gen Y clients have never heard of a cheque. We can usually set them up to get a counter cheque from their lender to use on auction day.
The problem with bank cheques is that they cost you money and the amount has to be 10% of your max bid price. If you get the property for less then the agent knows what you were prepared to spend (although too late at this point where you are signing contracts).

 

Just ring up the bank that the cheque is with ,and pay the fee to have the check cleared..

 

Has your Brother spoken with the REA to find out whether a personal cheque or a bank cheque was used for the deposit?
I wouldn't have thought personal cheques could be accepted for the reason you are outlining.
Electronic transfers seem the "norm" today.