In 2003 and early 2004 New South Wales, Victoria and Queensland released new guidelines for property auctions. The guidelines vary slightly from State to State, so ensure you know the rules in your State before proceeding. What follows is a general overview of the auction process and should not be relied upon when making decisions about your specific auction. However, it can help prepare you for the auction experience.
- A good tip is to attend some local auctions prior to the one you will be bidding at in order to get a feel for the process.
- An auction may be held in an Auction Room or on site at the property.
- In some States you will need to register with the auctioneer, giving your name, address and telephone number. You will be required to show proof of identity such as a driver's licence, passport or credit card, but be assured your information is protected by privacy laws. Once you have registered, you may be required to display an identification number when bidding. Only registered bidders or their representatives will have the opportunity to buy at auction in some States.
- Legislation in all States in relation to bidding at auction is under review, so if you have any queries you should discuss the process with your agent.
- The auctioneer will start by offering a brief explanation of the contract, terms of the auction and description of the property. The auctioneer will then invite bids from the audience.
- LJ Hooker has adopted the LJ Hooker Auction System - which means all buyers bidding at auctions conducted by an accredited LJ Hooker auctioneer can bid with the knowledge that the auctioneer will only have a maximum of one bid on behalf of the vendor, which, if used, will be declared as a bid on behalf of the vendor at the time it is made.
- You may also find bids come from people representing buyers who are not present. This is allowed providing the auctioneer has been advised in writing.
- Buyers can speed up the tempo of an auction by making big jumps in their bidding - say from $ 250,000 to $280,000 in one bid - or slow down the auction by bidding in small increments, but remember that the auctioneer has the right to determine incremental amounts.
- Once bidding reaches the reserve price and the property is to be sold, the highest bidder will be the buyer. At this stage, if you are the highest bidder, you must pay the 10% deposit and are legally bound to buy the property. If you default you risk losing the 10% deposit.
- If the reserve price is not reached there is still an advantage in being the highest bidder. The auctioneer may bestow the first right of negotiation with the vendor on the highest bidder.
Tips for buying at auction
- Before bidding at auction, make sure you attend two or three other auctions to get a feel for the process.
- Set your price range so your heart won't rule your head at bidding time.
- Steady, firm and unemotional bidding is often the best tactic - set your limit and stick to it.
- Take some support with you to the auction, preferably someone with a strong head to stop you bidding beyond your range.
- If you require help with bidding, don’t hesitate to ask your agent.
- Don't bid for any property unless you have obtained and accepted all legal, pest and building inspection reports.
- Don't be afraid to bid aggressively for the property - you want to eliminate other potential buyers.
- Expect the unexpected - prices at auction can shoot up very quickly.
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