Help fund relief efforts for the Australian Bushfires #beyondthebricks
Support Now
News

What to know before an Auction

By George Hadgelias

Terms to know before the auction hammer falls

Auctions unearth a range of emotions – anxiety, excitement, joy if you’re the successful bidder, or disappointment if you’re among those missing out.

Understanding the auction process and the lingo that is used can help to keep your emotions in check on the day.

How does an auction work?

There are rules about how an auction must be run; but within those rules, auctioneers have different ways of conducting auctions.

The auctioneers aim to encourage as many bidders as possible to compete, to achieve the highest possible price for the vendor.

The auctioneer can set the amount by which bids increase, called rises or bidding advances.

You don’t have to bid at the amount stated by the auctioneer but if you bid less, they can choose to accept or reject your offer.

Tips to make a winning bid

To bid successfully:

  • Bid confidently.
  • Ask relevant questions of the auctioneer, including who made a bid or when the a property is on the market.
  • Be clear about your bidding limit. You should have set a limit of how much you are willing to spend before the auction. Stick to it.

The auctioneer may halt proceedings if the bidding dries up and say they are ‘going inside’ or ‘seeking advice or instructions’ from the seller. They use this time to discuss the progress of the bidding with the seller.

What is a vendor bid?

During the auction, the auctioneer may place a vendor bid. A vendor bid must be declared by the auctioneer. It gives an indication that the vendor is not satisfied with the price reached at that point of the auction.

If the bidding has reached or is close to the reserve price – the figure at which the vendor has previously agreed they will sell – the auctioneer will confirm with the seller that they will sell at the highest bid.

If they agree, the auctioneer will say the property is on the market. Bidding will continue and the property will be sold to the highest bidder.

Read more: Are auctions better than theatre?

Don’t pass out if it passes in

The auctioneer will seek bids until they meet the seller’s reserve. If they don’t, the property is likely to be passed in. The highest bidder then gets first right to negotiate with the seller in an effort to achieve a sale.

There are important differences between buying a house at auction and by private sale.

If you buy at auction, you don’t get a cooling-off period if you change your mind – and you can’t make the contract subject to any conditions

This means that if you are planning to have a building or pest inspection – which we recommend you do – this needs to happen before the auction.

If you buy a property by private sale you are able to make the contract subject to conditions.

In a private sale, a cooling-off period of three business days applies from the date you sign the contract, unless this is within three days before or after a public auction.

Click here for more information.

Up to Date

Latest News

  • Should you hire someone to bid at an auction?

    Does the thought of bidding at an auction fill you with anxiety and make you want to run for the hills? Or maybe you’re just too time-poor to attend? Auctions are a great way of figuring out the true market value of a home but they can strike fear … Read more

    Read Full Post

  • How to always get your bond back

    In a perfect world, we’d never have to move house but in reality, renters relocate around every 4.5 years on average. The time, tension and financial pressure involved in moving all our possessions from one location to another combine to make it an experience most of us would rather avoid. … Read more

    Read Full Post