"I do thank you for the seamless execution of the Settlement of Ballybunyon with the simultaneous purchase of this new property. It was a pleasure to find that you took care of all the small details, long after the signatures where on the paper!" Liz Ford

How to Buy at Auction

To protect both seller and buyer, each state and territory in Australia has their own set of regulations governing auctions.  When you purchase a property at Auction in Queensland the Terms and Conditions of Sale by Public Auction form part of the Contract of Sale.
 
Legislation has ensured that the Auction process is transparent in Queensland, ensuring a level playing field for all buyers. If your perfect property has just come onto the market and is being sold by Auction, you will need to do your homework to ensure a pleasant auction experience. Remeber: the buyers set the price - not the agents. The seller decides to sell or keep the property.
 

Organise your finance in advance

Approach your lender to determine how much you are able to borrow. Loan pre-approval is a big advantage. Be sure that you have adequate funds in you bank account to write a cheque for the deposit which is usually between 5% and 10% of the purchase price on the fall of the hammer. Using a finance calculator can help you manage expectations.
 

Before Auction Day

  • Research the market - do your homework by inspecting other open homes around the area where you intend to buy, and gather as much information as you can regarding recent sales of comparable properties.
  • Inspect the property more than once and at different times of the day.
  • Request a copy of the Contract and seek legal advice as to its content and conditions if necessary.
  • If a building & pest inspection report is not made available, undertake your own so that you won't have any unpleasant surprises if you are the successful bidder. It will be the best money you will ever invest.
  • You may also consider investing in a Valuation by a registered Valuer to seek advice on the current market value of the property. A word of caution - Valuers generally are conservative with their assessments.
  • Visit other Auctions and observe bidders' tactics. After all, an Auction really is a psychological battle - a competition with high stakes. You will need to psych out the other bidders and try to unsettle them, perhaps by placing a larger bid than the Auctioneer is asking for. You can change the increments of the bids at any stage, however it is ultimately the Auctioneer's decision to accept your bid.

On Auction Day

Make a plan and stick to it. Above all be confident. Set a limit to your bidding and don't waiver. It is very easy to get caught up in the emotion of bidding & exceed your limit. Ask your agent to support you if you feel you need some - they are there to help you to buy the property.
 

Vendor, dummy and co-owner bids

The main difference between vendor, dummy and co-owner bids is that dummy bidding in Australia is illegal. A vendor bid is where the auctioneer will place a bid on behalf of the seller with a view to assisting the property reach its reserve price. Vendor bidding can only be done by the auctioneer or another legally permitted person and should be declared as part of the auction's process before the auction begins and during the auction when a bid is called on the  vendor's behalf.
 
Dummy bidding is illegal. It is false bids made by non-genuine crowd members. They have no intention of buying the property and are there purely to inflate the price. Unfortunately, some unscrupulous agents still partake in this illegal act, so don't bid until the house is placed on the market as dummy bidding is generally only used until the reserve price is met.
 
A co-owner is a person who has a financial share in the house, such as a divorced spouse, who wishes to buy out the other owners. Co-owner bids cannot be made through the auctioneer and are not announced during the auction. However co-owner bids are declared in the rules set out before the auction starts.
 
People raising their hands in an auction
 

Frequently asked questions:

 
Q: Do buyers have to register to bid at Auction?
Yes. If you think you may choose to bid, register. It doesn't matter if you don't end up bidding. You must show evidence of your identity (eg. driver's licence) and fill out a bidder's registration form.
 

Q: What is the Reserve Price?

This is the minimum price that the seller's will accept on Auction day. After this price has been reached, the property is called "on the market" and the highest bidder will then successfully buy the property.
 

Q: What is a vendor bid?

The vendor/seller can make a bid on their property if the reserve price hasn't been met. This is usually placed by their representative, usually the Auctioneer, who will announce that he is making a bid on the seller's behalf. There is no regulated limit to the amount of vendor bids that the Auctioneer can make in Queensland, but each vendor bid must be declared.
 

Q: What is a "dummy" bid and is it legal?

A 'dummy" bid is a false & deceptive bid made at auction by a party who doesn't intend to purchase the property, but are merely there to "drive the price up". This practice is no longer common, as all bidders must be registered. The Auctioneer will outline the terms and conditions of the Auction before it commences.
 

Q: What if a buyer is unable to make it to the auction, how can they bid?

There are 2 options available to the buyer:
  1. Telephone bidding: A letter of Authority must be completed before the Auction by the bidder and handed to the Auctioneer before the commencement of the Auction. Their agent will relay bids over the telephone on their behalf.
  2. A nominated person will bid on the buyer's behalf: Any person bidding on behalf of another person must provide the Auctioneer with a copy of their written authority (letter of authority) before the Auction, otherwise that person will be taken as acting on their own behalf.

Q: What does it mean when a property is passed in?

This is when bidding has not reached the minimum price that the sellers will accept and the selling agent will then negotiate with the interested parties and the seller post Auction behind closed doors to hopefully conclude a sale.
 

Q: What happens if the buyer doesn't pay the deposit on the Auction day?

It is difficult to have a bank cheque prepared for a 10% deposit on Auction day as no one really knows what the final selling price will be, but a personal cheque or cash is acceptable. If you are unable to provide the full deposit on the fall of the hammer  ask for a variation to the terms of the Auction before the Auction commences eg if the sellers will accept payment of deposit less than 10% and/or at a time other than on Auction day, perhaps on the next business day.  Failure to pay the deposit at the agreed time or of the agreed amount can cause a buyer to be in breach of the Contract. This applies to all Contracts of Sale, not just when purchased at Auction. Please read The Terms & Conditions of Sale by Public Auction, particularly Clauses 14 to 17.