Your dream home has just come onto the market and with a certain
amount of trepidation you realise that it is being sold by auction.
You've never been to an auction before - never mind purchased a
house at one - and you're a little worried that you won't know what
to do.
How
to have a happy auction experience
Make sure you have finalised all important details before the
auction date. Extensive preparation is essential to a happy auction
experience.
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Familiarise
yourself with the auction process by visiting as many
auctions as you can. Ask questions of the marketing agents
and find out everything you need to know about bidding.
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Inspect the property before the auction
date. Be objective and make sure you inspect other
properties as well. Inspecting other properties means you
can make an educated guess as to a fair purchase price. Work
out how much you are willing to pay and do not exceed your
maximum on auction day. If necessary, arrange an independent
valuation. |
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Make an appointment with the real estate
agent and ask as many questions as possible, including
bidding strategies. Also request a copy of the contract,
including condition reports, and study it carefully. |
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Visit your lender and finalise any home
loan arrangements. A deposit, often as much as 10% of the
purchase price, will need to be paid on completion of the
auction, so ensure you have these funds available. |
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On auction day it's important to remember that while
the auctioneer is employed by the seller to get as
good a price as possible for their house, they are
also there to help you buy the property. |
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Work out your tactics before the auction and stick
with them. Your visits to other auctions should give
you an insight into bidding tactics, such as
changing the increments of the bids away from the
auctioneer's chosen amounts or those of the other
bidders. This can intimidate other bidders; it shows
confidence and a strategic plan. More often
than not, a confident bidder ends up buying the
property! |
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What is vendor and dummy bidding?
A vendor bid is where the auctioneer will place a bid on behalf of
the seller with a view to assisting the property reach its reserve
price. Vendor bidding can only be done by the auctioneer or another
legally permitted person and has to be declared each time a vendor
bid is made.
Dummy bidding is bids made by a party who has no interest in buying
the property and is illegal in Australia. They have no intention of
buying the property and are there purely to inflate the price.
Unfortunately, some unscrupulous agents still partake in this
illegal act so please be aware. Under New South Wales law it is a
requirement that each bidder shows a paddle with a registered
number, which has reduced the practice some what.
How
are auctions regulated?
Auctions are a recognised and widely used form of selling. Not just
property but livestock, household goods and cars are auctioned, just
to name a few. Each state and territory in Australia has their own
set of regulations governing auctions, designed to protect both the
vendor and buyer.
The Real Estate Institute in each state and territory sets down
guidelines detailing their code of practice for the industry. By
ensuring your chosen agent is a member of the Institute, you can
guarantee a high standard plus an auctioneer who will adhere to each
and every regulation.
Not many complaints are made about auctions in Australia, however if
you do have any problems, contact the Real Estate Institute in your
state who will be able to refer you to the relevant authority. To
find your state’s Real Estate Institute visit
www.reiaustralia.com.au
