Buying at Auction
Buying at Auction
When buying at auction, many of the steps leading up to the purchase are the same as making a traditional purchase, therefore, it is important that in conjunction with this fact sheet you also read Buying a Property.
Before buying at auction it is important to:
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Organise your finances before making an offer or bidding at auction. Make arrangements to cover the deposit should your offer or bid be successful, and arrange to have the appropriate mortgage funds available for settlement.
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If you are buying at auction, you will be able to inspect the contract prior to and at the auction.
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You may be required to pay your deposit and sign contracts on the day of the auction
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Always set yourself a price that you do not want to go beyond and stick to it.
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Take an objective person to the auction: buying a home at auction is fast paced and can be very emotional, therefore, it is important to take someone with you that you trust and can help you make objective decisions in the heat of the moment.
Bidding
The real estate agent will be able to provide you all the information you need on how to make a bid, however, some important tips to remember are:
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Be at the auction venue early so you have time to register for the auction and settle before the auction starts.
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Once registered, you will receive a bidding card with a number on it, this allows the administrator to correctly register your bid, therefore, once the auction has started it is important to hold your number clearly in the air and use a clear voice when informing the auctioneer of your bid.
Dummy bidding
Dummy bidding is fictitious or false bidding at an auction by non-genuine bidders in the crowd, with no real intention to buy the property and without adequate disclosure of their interest.
The REIA supports legislation being put into place by most states and territories that prohibits misleading and deceptive practices such as dummy bidding.
For further clarification please see the REIA Guidelines on Auctions or contact your local Agent for the rules and regulations in your area.
WARNING
Section 78(3), Property, Stock and Business Agents Act 2002 (NSW) and clause 20(1), Property, Stock and Business Agents Regulation 2003 (NSW):
PENALTY FOR COLLUSIVE PRACTICES
It is an offence against the Property, Stock and Business Agents Act 2002 (NSW) for a person to do any of the following as a result of a collusive practice, or to induce or attempt to induce another person by a collusive practice to do any of the following:
(a) to abstain from bidding, or
(b) to bid to a limited extent only, or
(c) to do any other act or thing that might prevent free and open competition.
Severe penalties may be imposed on persons convicted of collusive practices.
Section 83(2), Property, Stock and Business Agents Act 2002 (NSW) and clause 20(2), Property, Stock and Business Agents Regulation 2003 (NSW):
SUCCESSFUL BIDDERS
The actual successful bidder at an auction sale must give to the auctioneer or an employee of the auctioneer:
(a) the bidder’s name, or
(b) the name of the person on whose behalf the successful bid was made.
Section 66(4), Property, Stock and Business Agents Act 2002 (NSW) and clause 20(2A), Property, Stock and Business Agents Regulation 2003 (NSW):
PENALTY FOR DUMMY BIDDING
It is an offence against the Property, Stock and Business Agents Act 2002 (NSW) for a person to do any of the following:
(a) make a bid as the seller,
(b) make a bid on behalf of the seller (unless the person is the auctioneer),
(c) procure another person to make a bid on behalf of the seller.
Any bid made with the dominant purpose of benefiting the seller constitutes a bid made on behalf of the seller. A bid may be found to be a bid made on behalf of the seller even though the seller did not:
(a) request the bid, or
(b) have any knowledge of the bid.
Severe penalties may be imposed on persons convicted of dummy bidding.
WARNINGS OCCUPATIONAL HEALTH AND SAFETY
All persons attending the sale are advised by the seller that the sale may involve a risk of physical harm and/or loss. Livestock, machinery, plant and equipment may be offered for sale and each such item has its own inherent risks that persons attending the sale need to appraise themselves of. All persons attending the sale do so at their own risk. All purchasers of items sold are advised that they must ensure, before each such item is removed from the sale, that it is safe and without risks to health when properly used. The seller does not accept any responsibility for any harm, loss or damage whatsoever and that you enter or attend the sale at your own risk. The seller’s agent is instructed by the seller to conduct the sale in the manner directed by the seller with items placed out and submitted for sale as directed by the seller. The seller’s agent has no control over any items offered for sale and accepts no responsibility for any harm, loss or damage whatsoever and that you enter or attend the sale at your own risk.