If you haven’t found yourself buying at auction before, your first auction can seem a little daunting. However, there are a number of processes and traditions associated with auctions that are important to understand – particularly if you are considering buying a property under auction conditions. Auctions have been recorded as far back as 500BC. The Romans used auctions extensively and since then this method of sale has been continually used throughout the ages. As a result, auctions play a major role in how properties are sold in Australia so it is important to feel comfortable about buying at Auction.
When buying at auction, YOU MUST BID! Furthermore, the highest bidder above reserve price will purchase the property. If your bid is the highest bid but hasn’t reached the vendor’s reserve price then the property will be passed in. You, as the highest bidder, will have the first opportunity to buy the property at the vendor’s reserve price. The Auctioneer will clearly announce when the property is on the market and is going to be sold. If the property is passed in on a vendor bid then the vendor, via the vendor’s agent, is at liberty to discuss the purchase of the property with any genuine buyers.
14 Things You Need to Know When Buying at Auction
1. What is a Vendor Bid?
It is a bid made on behalf of the vendor (owner) not a buyer.
2.Who can make a Vendor Bid?
Only the Auctioneer.
3.Does the Auctioneer have to declare a Vendor Bid each time it is used?
4.How many bids can a Vendor make?
There is no restriction but generally we allow a maximum of 2 or 3.
5. What is a Reserve Price?
The price below which the vendor will not sell. Although, this price may vary.
6. What does “Passed In” mean?
The bidding has not reached the vendor’s reserve price and the property is not sold.
7. If the property is “passed in”, who gets the first opportunity to buy the property?
The highest bidder.
8.What happens if the property is “passed in” on a vendor bid?
The vendor, via the vendor’s gent, is at liberty to negotiate with a genuine buyer.
9. Do I have to register prior to bidding at an auction?
Government regulation requires Queensland bidders show photo identification and register with the auctioneer. So, registered bidders will then be given a bidder identifier, such as a paddle, to be used during the auction.
10.What is a genuine bid?
All bids are genuine; there are vendor bids and buyer bids.
11.What is a buyer’s advocate?
A person who is commissioned to act on behalf of a buyer.
12.Do I need to pay a 10% deposit if I buy today?
If the contract calls for 10% or the vendor agrees to a lesser amount
13.Must I sign the contract on the day of the Auction if I buy?
To buy on the day you must sign a contract and pay a deposit.
14.Can I cool off if I buy under Auction conditions?
The law does not allow you to cool off if you buy under Auction conditions.
Furthermore, here are some other articles about purchasing property that other readers have found helpful :
- How To Buy A House : 9 Things You Need To Know Before Signing
- How To Be The Winning Bidder When Buying At Auction
- The 5 Step Game Plan To Begin Building Your Real Estate Portfolio
- The 7 Vital Facts You Need to Know As a Buyer In a Multiple Offer Situation
- Top 10 Real Estate Terms Defined
Most of all, don’t strategise too much – every Auction is different. So, try not to get caught up worrying about what will happen or how the bidding will unfold. Most importantly, try to simply focus on what you are there to do… purchase the property.
If you can bid with confidence and remember your budget then you’ll should hopefully be successful when buying at auction!
If you have a property in South East QLD that you would like to discuss with one of the team members at Calibre, then please feel free to call our office at (07) 3367 3411 or to search properties currently for sale then visit the Search Properties page on our website.