Buying at Auction
If you are planning to buy at auction thorough preparation for each purchase is essential. If you plan to bid you must do all the research before the auction day. Even when you know the vendor may choose to withdraw the property prior to the auction, you must still carry out all the checking processes, such as the perusal of the contract by your solicitor and arrangements for a thorough property and timber pest inspection before the auction.
You should arrange a property inspection to check the condition of the property before bidding starts. If you don’t you might find you’re landed with a house or building that has expensive and difficult to fix problems.
The Typical Auction
In New South Wales there are two types of auctions: onsite auctions and auctions carried out in the auction rooms of the real estate agent.
Wherever the auction is being held, the auctioneer will commence with a brief explanation of the contract and the terms of the auction. Buyers may ask questions if necessary. The auctioneer will then invite bids from the room or audience to get the auction started. Often it is difficult to get a genuine first bid, so the auctioneer, vendor or one of the other real estate agents will make the first bid.
Who can bid at an auction?
The following people can bid:
- Auctioneer on behalf of the vendor
- Agent on behalf of the buyer
- Any purchaser
- Mischievous bidders who just want to stir up the action (rarely a problem)
Only one bid may be made on behalf of the seller by the auctioneer. The auctioneer must state at the time that the bid is a ‘vendor bid’. It is an offence for an auctioneer to invent bids.
Registering to bid at auction
You will not be able to bid at auction unless you give the selling agent your name and address and show proof of your identity. Your details will be recorded in the Bidders Record and you will be given a bidder’s number to use at the auction. The Bidders Record is subject to strict confidentiality requirements. Just because you have registered, does not mean that you have to bid. Auctioneers must not accept a bid from a person unless they are registered in the Bidders Record and have a bidder number.
For more details on registering go to the Office of Fairtrading website www.fairtrading.nsw.gov.au
The ‘reserve’ price
Before the auction , the auctioneer and the vendor will set a predetermined minimum price. This is called ‘the reserve’ and is usually only known by the auctioneer and the vendor.