Purchasing property at an auction is different from purchasing property under private treaty. While you may come away with a deal, you have certain responsibilities at an auction that you do not have if you purchase property under private treaty.
It is important that you are informed about your rights and responsibilities at an auction. In New South Wales, the NSW Office of Fair Trading publishes a guide called the . Real estate agents must give all potential bidders at an auction a copy of the guide before the auction.
The person conducting the auction is known as an auctioneer. The auctioneer will typically inform or display that the auction is conducted under certain conditions, which are set by law. These include:
the highest bidder is the purchaser, subject to any reserve price
the auctioneer is entitled to make one bid only on behalf of the seller
before the auction, the auctioneer must announce that the auctioneer is permitted to make one bid on behalf of the seller
the auctioneer must announce immediately before, or in the process of making the bid, that he/she is making a vendor bid
the auctioneer can refuse a bid that is not in the interests of the seller
the auctioneer has no authority to accept a late bid, that is, a bid after the fall of the hammer
if there is a disputed bid, the auctioneer is the sole arbitrator and makes the final decision
the successful buyer’s name must be given to the auctioneer as soon as possible.
The reserve price is the lowest amount that the seller will accept for the property. The reserve price is typically not disclosed to the bidders, although the auctioneer will normally advise the bidders if the reserve price has been passed.
If the reserve price is not reached the seller must make the decision to pass the property in and re-list the property on the market, or to negotiate with any interested bidders present at the auction.
The most important thing for prospective purchasers to know is that if the prospective purchaser is successful at the auction, and that the reserve price has been passed, the prospective purchaser must sign the contract and pay the deposit on the spot. Unlike properties purchased through private treaties, no cooling off period applies to properties purchased at auction.
Because of this it is important for you to ensure the following before going to auction:
Have your solicitor or conveyancer review the contract before the auction, and seek amendments where necessary
Have your finance in order
Have made the necessary pre-purchase inspections before the auction.
We can help you with purchasing your property at auction. If you have any questions you should contact us using the quick enquiry form on this blog.