Buying a home at auction
A real estate auction involves public bidding for a property, which is sold to the highest bidder if the price has reached or exceeded the property's reserve as set by the vendor.
It’s a public trading event that is subject to strict rules, and typically carried out by a real estate agent, who acts as an auctioneer.
For first-time bidders it can be a nerve wracking experience, given the:
- often fast bidding speed
- auctioneer's cajoling and persuasive ways
- competition among potential buyers
Before you bid at an auction, ensure you have:
- your finance conditionally or unconditionally approved including, confirming with your lender the maximum amount you can borrow
- enough money to pay or transfer the deposit
- thoroughly inspected the property and know its condition including getting building, pest or strata reports
- reviewed the contract with your solicitor or conveyancer and are comfortable with its terms
You can negotiate the conditions of a contract of sale, it just has to be finalised before auction day.
It’s very important to understand there is no cooling-off period or time to change your mind about the sale if you're the successful bidder at an auction.
The bidding process
The auction process involves interested buyers competing to place the highest bid for a property.
The role of an auctioneer is to manage offers made by bidders and control the negotiation process.
Before auctioning a home, the seller will nominate a reserve price, which is not usually made public. If the reserve price is reached and bidding continues, the home will be sold at the conclusion of the auction.
Sometimes auctions can be fast paced with lots of bids being made at once. It’s important to keep track of the bids made and only offer what your budget allows.
If you are the successful bidder, you must sign the contract of sale and pay your deposit immediately after the auction finishes.