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By
Harvey Grennan, The Sydney Morning Herald
There
are two golden rules of buying at auction: do all your homework beforehand,
and bid within your upper limit no higher.
 The
auction will be subject to a "reserve price", which is the minimum
the vendor will accept, unless the property is advertised "without
reserve".
At the
auction, stand where you have a good view of other bidders. Raise
your hand to make a bid, and if you wish to move your bid by a greater
or smaller amount than the previous bids, call it out.
There
are several ways of putting pressure on other bidders.
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One
is to jump in early and set a cracking pace. Make your next
bid immediately after the previous bid. If the auction is moving
in $5,000 increments, increase the next bid by $10,000 always
keeping in mind your budgeted limit. |
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Another
approach is to wait until the bidding has slowed and other bidders
think they are close to winning the fray. Then come in with
strong bidding. Remember the property cannot be sold until it
reaches the reserve, and at that point the auctioneer will declare
it "on the market". Start bidding then. |
Auctioneers
do take bids "off the wall", particularly if there is only one genuine
bidder. This normally does not happen after the reserve price has
been reached, so once the property is declared "on the market" you
must be in it to win it. Before that, the only genuine bidder you
can be sure of is yourself.
If you're
nervous about bidding, attend some other auctions first or ask an
experienced friend or an independent agent to bid for you. Some Buyers'
Agents specialise in bidding on your behalf at auctions.
Check the time of the auction the day before so you don't arrive late.
Also make sure there have been no late changes to the contract you
were given.
If you
are the successful bidder, you will be required to sign a contract
on the spot and pay a deposit, normally 10%..
There is
no five-day cooling off period with an auction. When the hammer falls,
you are committed. If you're unsuccessful you may still incur costs
for building and pest inspections and solicitor's and valuation fees.
If the
property is passed in, you can make an offer to buy it by private
treaty, and you may be able to negotiate amendments to the contract,
such as a "subject to finance" clause. You would then gain the benefit
of the cooling-off period (although a contract signed the same day
as the auction is under auction conditions).
For a property
that has passed in, don't be afraid to make an offer below the "highest
bid" it may not have been genuine.
AUCTION
CONFIDENCE
Dummy
bidding and under-quoting property values were two practices
that made a farce of many auctions but ones that are either
being reviewed by various state parliaments or have had new
legislation already introduced to address them. The new legislation
aims to make people bidding at auctions more confident with
the auction system. Below is a State-by-State summary of the
changes.
NSW:
New laws came into effect on September 1 2003 to outlaw
dummy bidding, and under-quoting and over-quoting property values.
One vendor bid is allowed below the reserve price.
VIC:
Laws similar to those in NSW were introduced on February
1 2004.
QLD:
No Qld law defines dummy bidding but the Office of Fair
Trading targeted the practice earlier this year.
SA:
Legislation to ban dummy bidding and under- and over-quoting
is before State Parliament. Agents will be prohibited from advertising
a property for a price that is 10 per cent below the eventual
sale price.
WA:
Dummy bidding is not outlawed, however the Real Estate
Institute of Western Australia has amended its code of conduct
to ban the practice of agents pitting dummy bidders against
genuine home buyers.
TAS:
The State Government plans to introduce legislation to
ban dummy bidding and for vendor bidding to face more disclosure.
ACT:
Dummy bidding will be outlawed under proposed new laws,
and one vendor bid will be allowed at auction.
NT:
The Government is reviewing the Auctioneers Act. |
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