Tips for Bidding at Auction
On the day of the auction ensure you arrive early and make a final inspection of the property. Check the contract of sale and the auction rules which should all be on display for at least 30 minutes before the auction commences.
If you have any questions about the auction rules don’t hesitate to ask the agent in attendance.
You must understand one very important rule of auction: If the property is passed in below the reserve, the owner – through their agent or auctioneer – will negotiate first and only with the highest bidder for the purchase of the property. This is not a law but a lot of real estate companies policy on auction properties passing in.
So, if you have participated in the bidding or have been sitting back watching how it is progressing, and the auctioneer announces the property is going to be passed in, it is a good strategy at this point to make sure you are the highest bidder to secure the option to negotiate with the vendor.
Once the property is passed in, it is simply too late. The auctioneer can’t re-open the auction to accommodate a late bid and override the right someone else has secured ahead of you. If you are the highest bidder, how long do you have to exclusively negotiate with the owner? This may depend on whether you are prepared to accept the owner’s price. If you are not prepared to meet the owner’s asking price, the owner may end negotiations with you immediately and start negotiating with another interested party.
An auction is one of the two main methods of sale in Melbourne and Sydney, they account for around 30 per cent of all property sales. At an auction the property sells to the highest bidder as long as the vendor accepts the price. unlike private treaty sales, there is no cooling off period when purchasing at auction.
Private Treaty Sale
Private Treaty sales account for around 65-70 per cent of all property sales. Unlike an auction, the property is advertised at a price and is then negotiated between buyer and seller. Purchases made this way generally have a cooling off period of 5 business days.
AS the buyer you must pay a deposit to the selling agent who must keep it in a trust account by law. This is usually 5% or 10% of the agreed sale price, and becomes payable to the seller upon settlement, sometimes earlier if both parties agree.
This is the period of time between your contract becoming unconditional and the day you move in and you pay the balance of the purchase price.