Auction - buying

An auction is a gathering of potential buyers who publicly bid for a property. It is usually conducted by an estate agent, acting as an auctioneer and governed by strict rules. Buying property at auction is very different to other property purchases. The bidding process is public and if the hammer falls and you are the highest bidder, you have to sign the contract right there and then. This means you must be sure you are bidding on a property that you can buy.

Become informed on key things to know before you start bidding.

Auction language

Understand the following auctions terminology:

How does an auction work?

To participate or bid at an auction, potential buyers must register with the vendor’s agent and be given a bidder’s number. The auctioneer oversees the bidding process. They take bids from potential buyers and keep track of the current bid price. Before auctioning a property, the seller will nominate a reserve price, which is usually not advertised. If the bidding continues beyond the reserve price, the property is sold at the fall of the hammer. If you are the successful bidder, you must sign the contract of sale and pay the deposit on the spot (usually around 10 per cent of the purchase price). 

Difference between an auction and private sale?

Auctions differ from private sales as there is no cooling-off period:

If you are bidding at an auction, you must be ready to exchange contracts and complete the sale. Otherwise, you will lose your deposit and may be liable for any damages suffered by the vendor.

What happens on the day of auction?

On the day of the auction, the property may be open for inspection, usually half an hour before the auction starts. Use this opportunity to take a final look at the property, the contract and auction rules.

Agents must give all potential bidders a copy of the Bidder's guide before the auction. 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 to register. It is important to know how to register as you cannot bid if you are not registered. Agents are also required by law to have a list of the following auction conditions clearly visible for all potential bidders:

Attend a few auctions as a spectator to become familiar with the auction process. If the price is getting too high, you need to be able to walk away. This may be one of your biggest decisions, so it is worth making the right one, and being as well prepared and informed as possible about buying property.

Pre-auction offers

Sometimes the vendor agrees to consider pre-auction offers, which you can make through an agent before the auction. The negotiation process is the same as buying by private sale. 

What can I do to prepare for an auction?

Before you bid at an auction, consider the following:

Help inform your decisions by reading information in the Buying property section on the Fair Trading website, covering the process from start to finish.