You need to prepare before buying a home at auction. Try to go to a few auctions first to see how they work.
There is no cooling-off period for buying at auction. If you are the successful bidder at the auction, you will have to settle the contract even if:
The cooling-off period also does not apply to a private treaty contract:
The terms of sale usually require you to bid on an unconditional basis. This means you cannot have any conditions, such as:
Before the auction: Make sure you –
Make sure you ask the agent about:
It’s illegal for a seller or their agent to give you a price guide for an auction property. This is because they cannot know how high the bidding will go.
A property may appear on a listing website when you search by price. This is only for the purposes of the web search, and is not designed as a price guide. The website should give you a statement that explains this.
Sometimes, an auctioneer may offer you a comparative market analysis (CMA). This is a document that offers you information about what similar properties have sold for in the same area. They can only give you this document with the seller’s approval.
Remember to do all the necessary checks, such as a:
At the auction: Set a budget before the auction and stick to it.
If you are the successful bidder, you will have to settle the contract, even if you can’t afford it.
If you want to bid:
Only registered bidders can bid on the day. The auctioneer will give you a unique identifier such as a numbered paddle.
An auctioneer must have a current and valid licence. An auctioneer licence is the only type of licence that permits a person to auction real estate (not a real estate agent or chattel auctioneer licence). However, it is possible that a person has more than one type of licence.
They will need to either:
It might be impractical to display a sign if, for instance:
They need to announce the conditions of sale. These might include:
They may use the unsigned sale contract to disclose the conditions of sale.
The reserve price is the minimum sale price that the seller will accept. The seller sets the reserve price in writing with their agent before the auction. A seller doesn’t have to set a reserve price, but most will choose to have one.
The auctioneer is allowed to tell you whether or not the seller has set a reserve price. However, the auctioneer must not tell you the reserve price itself.
Once the reserve price is reached during bidding (or no reserve price is set), the property will be ‘on the market’. The auctioneer does not have to announce when a property is on the market, but they are allowed to do so if they wish. If an announcement is made, it must be truthful.
Once a property is on the market, it means the auction must result in a sale. The winning bidder must purchase the property, and the seller must sell.
If the property doesn’t reach the reserve price, you can negotiate with the seller after the auction. If this leads to a sale within 2 days of the auction, you will not get a cooling-off period.
If you reach an agreement more than 2 days after the auction, you will have access to a cooling-off period.
The successful bidder
If you are the successful bidder, you must sign a contract immediately.
There are very serious legal consequences if you cannot settle the sale on time. You may be forced to pay:
In Queensland, auctioneers can accept ‘vendor’ (seller) bids, but only up to the reserve price.
Before the bid reaches the reserve price, the auctioneer can:
The auctioneer must announce if a bid is a vendor bid. If a vendor bid is announced, you know that a reserve price has been set, and that it has not yet been reached.
Once you reach the reserve price, any more vendor bids will become ‘false bids’.
False bids are illegal.
Source: QLD Government