Auctions can be both advantageous and challenging for buyers. Here are the key points you need to be aware of when bidding at an auction:
No cooling-off period
Once the hammer falls, the sale is final. Unlike private treaty sales, auctions do not have a cooling-off period, so you cannot change your mind after winning the bid.
Reserve price
The vendor sets a reserve price before the auction, which is often kept confidential until bidding reaches that level. The reserve is not necessarily the minimum price the seller will accept and may be set artificially high. If bidding doesn’t reach the reserve, the property may be “passed in,” leading to negotiations between the highest bidder and the seller.
Payment on the day
The winning bidder must pay the agreed deposit immediately after the auction, usually via a digital transaction.
Bidding options
While attending in person is common, you can often bid by phone. Some buyers choose to have a buyer’s agent bid on their behalf.
Auction preparation
To prepare for an auction:
- Set a maximum bid and decide on bidding increments beforehand
- Remain calm and don’t feel pressured to match other bidders’ increments
- Ensure you don’t exceed the valuation you’re prepared to finance
- Consider using an experienced buyer’s agent to bid on your behalf
Registration and identification
All potential bidders must register before the auction and show identification. If someone is bidding on your behalf, they must present a signed document proving their authority to do so.
Vendor bids
The seller can make a limited number of vendor bids, which must be announced by the auctioneer. These bids must be below the reserve price.
Auction conduct
It’s illegal to engage in dummy bidding or to hinder other bidders. Substantial fines may apply for breaking auction rules.
By understanding these key aspects of how auctions work, you’ll be better prepared to participate and potentially secure your desired property.
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