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Gavel
4 Oct 19

How to buy at auction

When a property is offered by auction, the marketplace has the opportunity to determine its value. This provides homeowners and buyers with an open, transparent process where everybody has an equal chance.

It also provides certainty to all parties involved. There is a defined marketing period, during which buyers may inspect the property, arrange building and pest inspections, and complete their enquiries.

Homes offered by auction sell faster than by any other method.

At auction, when the highest bid exceeds the homeowner’s ‘reserve price’ the property is sold. So, to be successful, all you need to do is bid to your comfortable limit.

It’s important to have completed your enquiries, arranged your finance, and be in a position to pay the deposit if you are the successful bidder on the day. If you don’t have a personal chequebook, speak to the agent in advance about acceptable deposit payment methods.

When the auction starts, make yourself visible to the auctioneer and bid confidently. This may discourage competing buyers. When the auctioneer announces the ‘property is on the market’, it will be sold to the highest bidder.

Only the highest bidder can successfully purchase at auction. If bidding fails to reach the reserve price, it’s still very important that you be the highest bidder as this will give you the first opportunity to purchase at the vendor’s reserve price. Should you decline, and thereby extinguish that opportunity, the agent is free to approach other parties that have expressed an interest in further negotiation.

 

FAQ.

Is buying at auction unconditional?
Yes. There is no cooling off period.

Can the owner make ‘dummy bids’?
No. Non-genuine attempts to lift the bidding are illegal.

What is a ‘vendor bid’?
It is a legally acceptable bid made on behalf of the owner by the auctioneer. The auctioneer must disclose any ‘vendor bids’.

What is a ‘reserve price’?
The price beneath which the homeowner will not sell the property.

What does ‘passed in’ mean?
The bidding has failed to reach the minimum sale price acceptable to the homeowner.

Why be the highest bidder beneath reserve?
If the property is ‘passed in’, the highest bidder has the first opportunity to negotiate.

What if the highest bid is a ‘vendor bid’?
The homeowner may negotiate with any interested party through the agent.

When must the deposit be paid?
The deposit stated in the contract of sale must be paid immediately after the auction.

Is the deposit negotiable?
No. Not on the day of the auction. However, the homeowner may agree to an alternative arrangement if discussed before auction.

Should you require any further information, please do not hesitate to contact us.

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