Your Guide to Buying
AT AUCTION
Your Guide to Buying at an Auction
Buying a property at an auction can be a nerve-wracking or exhilerating experience (and can often be both!).
A proven and popular method of property sale in Victoria, the auction process allows the market to determine in a very transparent and clear way the value of each property.
Major overhauls of legislation regarding the conduct of real estate auctions and the rights and responsibilities of all parties were introduced in 2004 and 2008, when the Victorian Government introduced changes to the legislation pertaining to the conduct of real estate auctions. This page outlines these changes and answers some frequently asked questions.
What is a vendor bid?
A bid made on behalf of the vendor (the owner of the property), not a buyer. A vendor bid can only be made by the auctioneer, who must declare to bidders that the bid is being made on behalf of the vendor.
How many bids can a vendor make?
There is no restriction but best practice is to keep to a limit of one or two vendor bids.
What is a reserve price?
The price at which the vendor is prepared to sell the property. This price may fluctuate over the course of a campaign and is often set by the vendor on the day of the auction.
What does ‘passed in’ mean?
The bidding has not reached the vendor’s reserve price and the property is not sold.
If the property is ‘passed in’, who gets the first opportunity to buy the property?
The highest bidder has exclusive rights to negotiate with the vendor at the completion of the auction. If the highest bidder does not purchase the property, the vendor’s agent is then at liberty to negotiate with any genuine buyer.
If the property is ‘passed in’ on a vendor bid, what happens then?
The vendor’s agent is at liberty to negotiate with any genuine buyer.
Do I have to register prior to bidding at an auction?
Not in Victoria.
What is a genuine bid?
All bids are genuine. There are vendor bids and buyer bids. There are strict penalties for ‘dummy’ bids.
Do I need to pay a 10% deposit if I buy on auction day?
Yes. If the contract calls for 10%, or if the vendor agrees to a lesser amount by prior arrangement.
Must I sign the contract on the day of the auction if I buy?
Yes. To buy on the day you must sign a contract and pay a deposit.
If I am not the highest bidder, can I make an offer after the auction?
No. The law prohibits late bids. Once the property has been announced ‘sold’ by the auctioneer, no other offers are taken.
Can I cool off if I buy under auction conditions?
No. The law states that there is no cooling off at a public auction.
Real Estate Auction Rules
Brad Teal Real Estate is a member of the Real Estate Institute of Victoria (REIV) and conduct all auctions in accordance with the institute guidelines.
By law, the auctioneer must advise the following at the commencement of an auction:
1. Today’s auction will be conducted in accordance with the rules in Schedule 1 of the Sale of Land Regulations 2004 and any additional conditions that were made available for inspection before the start of the auction.
2. The auction rules permit the making of bids on behalf of the vendor.
3. The law prohibits the making of vendor bids other than by the auctioneer.
4. During the auction, the auctioneer will say, “VENDOR BID”, when making bids on the vendor’s behalf.
5. The auctioneer will indicate bidders on request.
6. The law prohibits a person from falsely claiming or falsely acknowledging that he or she made a bid.
7. The law prohibits an intending bidder or a person acting on behalf of an intending bidder from intentionally preventing or causing a major disruption to the auction.
8. The law provides for substantial penalties for any person who engages in prohibited conduct.
REIV Auctioneer Statements at Public Auctions Required under the Sale of Land (Regulations) 2004
How to bid at an auction