Buying a property at auction can be beneficial because you might be able to find a good property for a cheaper price. However, you must be familiar with the strict rules and process of auctions.
In Victoria, there is no need to pre-register before participating in the bidding process. You can just show up at the date, time and place advertised for the auction and bid. However, it is strongly recommended that you conduct due diligence of the property before the date of the auction to check the actual condition of the property. This is because properties at auctions are usually sold on an “as is, where is” basis. There is no warranty as to its quality or fitness for your purpose. By bidding at the auction, you accept whatever may be the condition of the property.
At the day of the auction
You will be informed of the terms and conditions of the contract, auction rules and restrictions. At the fall of the hammer, the property may be sold to the highest bidder. However, there may be instances where the highest bidder does not get the property. An example is when a property has been “passed in”, meaning, the highest bid does not reach the reserve price (lowest acceptable price) of the vendor. In this case, the highest bidder may negotiate to buy the property but if he does not buy the property then it will be offered to other buyers.
Also, when the auctioneer announces that there is a vendor’s bid, you must accept the bid if you want to buy the property. A vendor’s bid is a counter-offer made by the vendor if the highest bid does not reach the reserve price. This is in effect an announcement of the reserve price or the lowest price the vendor is willing to accept. This actually where the real bidding takes place. In Victoria, there is no limit as to the number of vendor’s bid.
Success – Congratulations to the happy bidder!
If the property has been awarded to you at the auction sale, you must sign the contract and immediately pay the deposit. You cannot negotiate the terms of the contract and there is no cooling-off period. You can no longer change your mind after the sale. The sale is binding and enforceable upon signing of the contract and payment of the deposit.
If you are planning to buy a property at an auction, you may visit our conveyancing page or call McClure Law at our Sunbury office on 9744 1881 to get more conveyancing advice from our team, and before you place that winning auction bid! Good luck bidding!