Auction: Buying at Auction

Buying at Auction

If you're keen to purchase a property and it's being sold under the hammer (by auction), you may be feeling nervous about the process. REISA's first tip is get informed so you feel more comfortable with the process. An important thing to know is that the auction system is very transparent, as you can see all other buyers and you are all bidding together. So don't be intimidated - your bid is always about what you're prepared to pay.

There are some handy tips to think about if you're considering buying at auction.

Before auction day

  • Inform the agent handling the sale of your interest and leave your contact details. Request to be kept informed in the event that prior offers are to be considered
  • Conduct research on the area where the property is situated to ensure it meets your requirements and understand what similar properties in the area have sold for
  • Before the auction of the property you are interested in, attend other auctions in the area to get a feel of the auction process and for a comparison of prices
  • Visit your financial institution to arrange your finance prior to auction day and ensure you have the 10% deposit ready to pay on the day in the event you are the successful bidder
  • Prior to auction, it is recommended that you arrange a building inspection to ensure the property is in a sound structural condition
  • Take the time to inspect the contract, certificate of title and Form 1 (section 7 statement) which must be on display at the agent's office three clear business days prior the auction date or, available to view at the auction 30 minutes prior to the start of the auction
  • Discuss any variations to the standard terms and conditions with the agent prior to auction who will liaise with the vendor. If the variations are agreed to, ensure you receive approval to any amendments in writing

On the day of auction

  • All bidders must be registered. You can generally register on the day of auction (make sure you allow plenty of time to do this), or you can register at the agent's office in the days leading up to auction
  • If you require someone to bid on your behalf you must notify the agent that you have instructed a third party to bid
    on your behalf. The person bidding on your behalf will be asked to sign a proxy form prior to the auction
  • If you are the successful bidder at the fall of the hammer, you will be required to sign a contract of sale immediately and pay the 10% deposit, so ensure your finances are in order to allow this to occur and not jeopordise your purchase
  • Unless advised otherwise, a reserve price will be set, in writing, just prior to the auction. This price generally will not be disclosed during the auction
  • If the reserve price is not met and you are the highest bidder, you may be invited to negotiate with the agent to purchase the property - this choice will be made by the vendor
  • It's important to know that the vendor of the property is entitled to have up to three bids made on their behalf by the auctioneer, who must announce each such bid as a ‘vendor bid’. The amount of a vendor bid must be less than the vendor’s reserve price. If you hear this called during an auction, it means that the vendor's reserve hasn't been met yet and if you're serious about purchasing the property, you should consider increasing your offer.

To assist consumers with real estate queries, REISA operates a free information service – REISA Query Connect on free call 1800 804 365, between the hours of 9.00am to 4.00pm each weekday. This service is staffed by knowledgeable real estate professionals with many years of practical experience.