your guide to bidding at auction
your guide to bidding at auction It is important to understand that if you are thinking of bidding on a property that is for sale by Auction that you understand the process and the contract terms. This guide will help to familiarise you with some of the terms and how the bidding process works, MICM Real Estate recommends that you seek your own professional advice where necessary.
Before you bid
Research the market, the internet, auctions, speakyour with youragent estateand agent and Research the market, searchsearch the internet, attendattend auctions, speak with estate monitor auction results. Thisget willfamiliar help you getthe familiar with the way interacts the auctioneer interacts localmonitor auction local results. This will help you with way the auctioneer with the crowd and how the bidding process works well as giving you confidence with your bid and with how the the crowd bidding process works as well as giving youasconfidence with your bid
Get independent, expert on legal, finance building matters Get independent, expert helphelp on legal, finance and and building matters IMPORTANT: You cannot make the contract subject to any further conditions (for example, obtaining finance or having a longer settlement period) unless the vendor agrees to them. You will be offered a contract in the same terms that was on display before the auction, be sure to check these terms including how much deposit must be paid on the day, and how that deposit will be paid. There is no cooling-off period.
Auction Day Before bidding starts, the auctioneer must tell all bidders: The auction will be according to the rulesrules auction willconducted be conducted according to auction the auction •The The rulesrules prohibit bidsbids being accepted afterafter the fall The prohibit being accepted theoffallthe of hammer the hammer •Bidders will be on request willidentified be identified on request •It is Bidders against the the law law to make a false bid,bid, hinder another bidder, or inorany wayway intentionally disrupt an It is against to make a false hinder another bidder, in any intentionally disrupt •auction an auction Substantial finesfines apply to anyone whowho engages in illegal auction conduct Substantial apply to anyone engages in illegal auction conduct •Whether or not there will be vendor or co-owner bids Whether or not there will be vendor or co-owner bids •Any Any conditions that that apply to the additional conditions apply to auction the auction • additional It is illegal to disrupt an auction, but you can still ask questions. During the auction, anyone can ask the auctioneer a reasonable number of questions about the property, the contract, or the auction. If you are bidding, you can also ask the auctioneer to indicate who else made a bid.
Bidding at Auction Auctioneers have different ways of conducting an auction. Generally, they aim to encourage as many bidders as possible to compete, to achieve the highest possible price. The auctioneer can set the amount by which bids increase. These are called rises or bidding advances. You can bid at the amount stated by the auctioneer or offer an alternative amount. The auctioneer may choose to accept or reject that bid. Generally, the amount the bidding advances will decrease as the auction draws to a close. The auctioneer may:
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Refuse a bid at any timetime during the the auction, including when the the auction hammer is falling Refuse a bid at any during auction, including when auction hammer is falling If there is a isdispute overover a bid, resume thethe auction at the lastlast undisputed bidbid or or start thethe bidding again If there a dispute a bid, resume auction at the undisputed start bidding again Refer a bid to the seller at any timetime before the the conclusion of the auction Refer a bid to the seller at any before conclusion of the auction Withdraw the the property from salesale at any timetime Withdraw property from at any
Vendor and co-owner bids Vendor and co-owner bids are allowed at auctions. If these bids are to be made at an auction, the arrangements for making vendor bids must be set out in the rules displayed before the auction starts & announced by the auctioneer at the start of the auction.
What is a Vendor bid? A Vendor bid is when the auctioneer bids on behalf of the seller because the seller is not satisfied with the amount of the last bid. This type of bid can only be made by the auctioneer & must be announced by the auctioneer when the bid is made.
What is a Co-owner bid? When a property is jointly owned, one or more of the owners who genuinely wants to buy the property may bid from the crowd. Co-owners may bid themselves or through a representative in the crowd but not through the auctioneer. The arrangements for making co-owner bids must be set out in the rules displayed before the auction starts & announced by the auctioneer at the start of the auction. It is against the law to make a false bid, hinder another bidder, or in any way intentionally disrupt an auction, significant penalties apply to anyone who engages in illegal auction conduct.
“On the market” The auctioneer may halt proceedings and say they are ‘going inside’ or ‘seeking advice or instructions’ from the seller. If the bidding has reached or is close to the reserve price (the lowest price at which the seller will sell), the auctioneer will ask the seller if they will sell at the highest bid. If so, the auctioneer will say the property is ‘on the market’. Bidding will continue and the property will be offered to the highest bidder, at the seller’s discretion. “Passed in” If bids do not meet the seller’s reserve, the auctioneer will seek more bids. If bids still do not meet the reserve, the property may be ‘passed in’ or ‘withdrawn from auction’. The highest bidder then gets first right to negotiate with the seller.
You’re the successful bidder, what’s next? There is no legally binding contract until both buyer and seller have signed the contract of sale. If you are the successful bidder at the auction, you:
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Will Will be asked to immediately signsign thethe contract in the terms that were onon display prior toto the start be asked to immediately contract in the terms that were display prior the startof the auction of the auction Cannot make the contract subject to conditions without the agreement of the Cannot make the contract subject to conditions without the agreement of vendor the vendor Will Will not not havehave a cooling-off period a cooling-off period SignSign the contract before the seller, to make your formal offer tooffer buyto thebuy property. The seller the contract before the seller, to make your formal the property. Theaccepts seller youraccepts offer byyour alsooffer signing the contract by also signing the contract HaveHave to pay the deposit specified in the (unless otherwise agreed). to pay the deposit specified in contract the contract (unless otherwise agreed). When you and the seller have signed the contract and the deposit has been paid, the sale is binding and enforceable.
Paying a deposit at auction There are no laws about the amount of deposit but it is usually 10 per cent of the purchase price. Deposits can be made in any way depending on the terms and conditions set by the selling agent. The deposit must be held by the seller’s estate agent, conveyancer or legal practitioner in a trust account until the settlement date. The deposit can be released to the seller before settlement, if you agree.
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