All information disclosed has been sourced by the Office of Fair Trading. OFT.
Buying at an Auction
Residential and Rural Properties
If you are thinking about buying a residential or rural property at an auction, you need to be well informed about your rights and responsibilities.
Under law, agents are required to give all potential bidders a copy of a publication called the Bidder’s guide prior to the auction.
It is strongly recommended you take the time to read it. The Bidder’s guide contains important information you need to know, such as, how you register to bid and what kind of identification you must provide before you can bid.
Read the Bidder’s guide.
Because buying at an auction can be a nerve-racking experience, in addition to reading the Bidder’s guide, it is a good idea to attend an auction or two as a spectator to familiarise yourself with the auction process.
Also, take the time to find out what prices properties in the area have sold for, so you have a guide to the market value of the home you want.
Before auctioning a property, the seller will nominate a reserve price which is usually not told to the interested buyers.
The reserve price is the lowest price that the seller is willing to accept. If the highest bid is below this price, the property will be ‘passed in’. The seller will then either try and negotiate a price with interested bidders or put the property back on the market.
If the bidding continues beyond the reserve price, the property is sold at the fall of the hammer. If you are the successful buyer, you must then sign the sale contract and pay the deposit on the spot (usually 10%).
Unlike when you buy a house that is for sale, there is no cooling-off period when you buy at auction, or exchange contracts on the same day as the auction after it is passed in.
So it is important to:
- have your solicitor or conveyancer examine the sale contract before the auction to make sure everything is in order
- have your finance arranged
- have pre-purchase inspections completed prior to the auction.
If you have any further questions feel free to give us a call on (02) 6332 2900.
Source: OFT
