Using online banking to buy at an auction is not permitted. Here’s how you can pay the deposit when you don’t have a chequebook:
Your first option is a little old school – a chequebook on your personal bank account which you can order over the phone or personally at your local branch. It is free but you have to pay minor fees related to using personal cheques. There may be a withdrawal fee for every cheque that you issue on your account but it will be minimal.
One great thing about using a personal cheque at auction is that if you beat the other bidders, you can write out the exact amount for the winning bid.
Another option is a cheque provided by the bank. You have to do this before the auction because banks are close after business hours and during weekends, which are normally when auctions are held.
But using a bank cheque is risky because the cheque must be written for 10% of your maximum bid. This means you won’t have the flexibility to increase your budget if needed and you may fail if the selling price is higher than your maximum bid. There’s no problem if your maximum price is higher than the selling price because it just means more money has been allocated for the deposit on the property. The bank cheque costs a small fee, normally between $10 and $25, but these can add up if you continuously fail at auctions.
The last option is deposit bond. Also called a deposit guarantee, it is a form of insurance policy that serves as a guarantee to the seller that you will pay the deposit. One benefit of deposit bond is that you can use it at several auctions because the details on the property and the seller are left blank for you to fill up. This is a great option for those considering buying off the plan provided the developer takes deposit bonds. Another benefit is that you have more time to arrange the financing for the property and potentially claim a discount if the developer is raring to sell.
But you have to ask the seller’s permission to use a deposit bond and be sure to read the contract of sale.
Electronic transfer or on-line banking
There is an exception to using on-line banking and it’s a little like using a bank cheque because you need to transfer 10% of your maximum bid prior to the auction. The transfer must be made in advance before the auction and must appear in the agent’s trust account. Most buyers forgo this option as they do not wish to expose their maximum bid but if that does not worry you then it is an option.