Bidding at an auction: Tips and tricks for Queensland Farmers
In recent years, property auctions have become an increasingly popular method for selling farms in Queensland. Whether you’re looking to buy your first piece of agricultural land or expand an existing operation, bidding at an auction can be a rewarding experience—but only if you’re well-prepared. Auctions offer a faster, more certain way for sellers to secure a contract, but for buyers, they present a high-stakes environment where success hinges on preparation.
As a local solicitor with expertise in rural property law, I’ve compiled a comprehensive guide to help you navigate the process of attending a property auction. Whether you’re bidding for farmland or other types of property, these tips will increase your chances of success and help ensure you make a sound investment.
Why Sellers Prefer Auctions
Sellers favour auctions over private sales for a few key reasons:
Unconditional Contracts: Auctions result in unconditional contracts, meaning the sale isn’t subject to finance approval, a cooling-off period, or property inspections. This gives sellers confidence that once the auction concludes, they will be paid promptly, typically with settlement occurring within 30 days.
Competitive Bidding: Auctions create a competitive atmosphere, where buyers must act quickly and decisively to secure the property. Sellers benefit from buyers bidding their maximum price without knowing what other bidders are willing to pay.
However, while auctions can be advantageous for sellers, they are a fast-paced environment that requires careful preparation from buyers.
Due Diligence: Know What You’re Buying
Due diligence refers to the research and investigation that a buyer should undertake to understand the risks and benefits of purchasing a property. In an auction setting, where the contract is unconditional, due diligence done prior to the auction is essential to avoid any costly surprises after the gavel falls.
Here’s a checklist of due diligence tasks every potential buyer should undertake before an auction:
Conducting Property Searches
Title Search: Ensure there are no outstanding encumbrances or legal issues with the title of the property.
Survey Plan Search: Confirm property boundaries and legal access to the land.
Vegetation Mapping: Investigate whether any land clearing restrictions apply.
Contaminated Land Search: Check for any previous contamination or environmental hazards.
Biosecurity Search: Look for any past pest or disease incidents on the land that could affect future agricultural use.
Property Inspections
Building and Pest Inspections: If there are any structures (such as farmhouses, machinery sheds, or other buildings), get a building and pest inspection to assess their condition.
Building Approvals: Request copies of all building approvals held by the Seller for the dwellings and/or sheds on the property. If the improvements are pre-1975 they won’t hold final building approvals (and don’t need to) as they pre-date the building code. All houses and/or sheds built or substantially renovated from 1998 onwards in Mackay Regional Council area should have final building certificates to confirm they were built to the required standard in the region at the time. If the Seller doesn’t hold any approvals, you can conduct a search with Council to see if they hold any records. Otherwise, if the buildings are newer (post 1998), you need to factor in that the building/s may not be built to code and could be classed by Council as illegal structures.
Soil Tests: If you intend to grow specific crops or build structures, it’s wise to conduct soil tests. Understanding soil composition and fertility can prevent unpleasant surprises down the line.
Council Inquiries on Land Use
If you plan to change the current use of the land (e.g., transitioning from agricultural use to tourism or short-term accommodation like farm stays), you will need to seek approval from the local council. Council may impose certain conditions or outright reject your proposal, which could affect the property's suitability for your intended purpose.
Review Financials
When purchasing farmland, the property is essentially a business that generates income. To ensure the farm will be financially viable, request detailed financial documents such as profit and loss statements, balance sheets, and farm production figures. You can work with an accountant to assess the farm's current profitability and project future financial outcomes. Don’t forget to factor in running costs, such as equipment, labour, and maintenance.
Water Rights
Water is vital for farming, so understanding the water rights associated with the property is critical. Verify whether the property comes with water licences or allocations and assess whether they are sufficient for your intended agricultural use. It’s also important to confirm the costs of water and whether there’s legal access to water sources if they’re located off the property itself. You should also check if the bore or irrigation equipment is in good working order and condition.
Tip: Due diligence can take weeks to complete. It’s vital to start early to give yourself enough time to gather all the information you need before auction day.
Conclusion
Next issue, we’ll continue on with our tips and tricks for preparing for and attending at auctions.
If you have any questions or would like help with getting ready to bid for a property at auction, feel free to get in touch with our team by phone or email.
This article provides general information only. For advice tailored to your specific situation, please seek independent legal guidance.