If you’ve never experienced an auction before, it’s not something to fear. A professionally run, transparent auction can be a successful and satisfying transaction experience for both the buyer and seller. As a buyer, it is essential to understand the conditions of auctions before attempting to participate.
Register as a bidder
You can’t just show up to an auction – there are a few things you need to do first. You must register as a bidder (your PRD Real Estate Agent will be able to assist you with this process). You should have conducted all inspections and ensured you are ready to purchase the property.
Get your finances ready
It is essential that your finances are in order, you have money ready to pay a deposit and, if you intend on borrowing, a certificate from a mortgage lender indicating how much you can borrow. Your solicitor must also check the terms and conditions of the contract.
If your bid is successful
If your bid is successful, you must pay the deposit and sign the contracts immediately. A personal or bank cheque is usually acceptable – consult with your PRD Real Estate Agent beforehand. Each state is different, but there is generally no cooling-off period at auctions. You are now committed to buy!
If reserve price is not reached
If the bidding does not reach the reserve price, the house is not sold, and is “passed In”. If this happens, the highest bidder at the auction now has the first opportunity to negotiate with the seller. Don’t be shy! If the property has not met the reserve, all you have done is have a bit of fun.
How to bid at an Auction
- Attend auctions
Attend a couple of auctions to get the feel for how they work.
- Pre-purchase inspection
Consider getting a pre-purchase building inspection prior to the auction.
- Arrange finances
Know how much you can really spend. Discuss with your agent so they can help you secure the property. Specifically, have the deposit organised at least a week beforehand.
- No cooling off period
Remember there is usually no cooling off period when buying at an auction.
- Arrive early
Arrive early to allow plenty of time to register so you can legally bid for a property.
- Bidding on behalf of another person
If you’re bidding on behalf of another person, you must provide a letter of authority and provide their details to the auctioneer in order to register them as bidders.
- Know the terms and conditions
The auctioneer will read out some or all of these before the auction.
- Be clear and visible
Make sure the auctioneer can see and hear you. Hold up your bidder number and call out your bid clearly.
- If the property is passed in
If the property is passed in, the property goes on the open market and the highest bidder may negotiate with the seller. You can make an offer with conditions on it but you’ll need to act swiftly – the best time is immediately after the auction ends.The auctioneer’s decision is final in all matters relating to the auction.
- Rely on your judgement
Make sure yourself (and any other invested decision maker) only rely on the judgement of yourselves and your agent. Don’t allow parties who are not purchasing the property to distract or influence your decision.
- Ask questions
If you are not sure about anything, ask your real estate Agent or the auctioneer. They’re happy to help!
- Bid confidently within your means
Only bid within your means but bid early and confidently. This sends a message to other buyers you are serious and they might not wish to compete for the property. This puts you in a strong position.
- Don’t be shy
If the property has not met the reserve, all you have done is have a bit of fun.
- If you are successful
Remember that if you are the successful bidder you will be required to sign the contract of sale and pay an agreed deposit or nominated amount on the spot.
Buying from overseas
The PRD International division was specifically established to cater for the needs of people wanting to invest in Australia from overseas. We strive to ensure foreign buyer interest is taken seriously and our Real Estate Agents are keen to work with you to meet your requirements. Our affiliate offices and agency networks span the globe, including Hong Kong, Singapore, Malaysia, Indonesia, Middle East, New Zealand and South Africa.
- Deal with a reputable international property specialist.
- Have access to quality property research.
- Get legal, financing and taxation advice – this is essential!
- Hire property management services to look after your property.
- Make sure the property has FIRB approval or is eligible for approval.
For more information on foreign investment guidelines, please visit firb.gov.au.