When it comes to buying a home or investment property many people are overcome with nerves or uncertainty on how to bid at auction. Recent changes in legislation have caused confusion about the auction process so we’ve outlined some important things for you to know.
In addition to making yourself familiar with the information we’ve outlined below, we recommend getting out on the weekend and watching auctions in process to educate yourself. But if you are still unsure about bidding, then Nelson Alexander are pleased to offer you the value-added service of our Managing Director, Paul Lunardi, to bid on your behalf. For more information on this service please call Kerryn Donchi on 9417 5079.
How does bidding work?
You need to put your hand up to indicate your interest!
Once the auctioneer declares the property is “on the market”, the highest bidder will be the winner of the auction.
However, if the vendor’s reserve price has not been reached then the property will be passed in to the last bidder, who will be taken inside and offered the property at the vendor’s reserve price.
You must be the highest bidder to have this right. If you are not the highest bidder then the auctioneer has no obligation to liaise with you once the property has passed in.
Making a Dummy Bid
The illegal act of dummy bidding (where a false bid is made up by the auctioneer) now attracts a substantial financial penalty.
Nelson Alexander does not condone dummy bidding. Our auctions are conducted with total transparency, in accordance with legislation.
Making a Vendor Bid
The auctioneer has the right to place bids on behalf of the vendor. This is called a vendor bid.
Vendor bids can be made by the auctioneer when bidding is clearly at a level UNDER the figure at which the vendor would consider selling. The auctioneer will state that he or she is making a vendor bid.
Please note that the auctioneer is the ONLY person who has the right to make a vendor bid. A vendor bid made by anyone else is considered to be a dummy bid which is illegal.
Research
Go to as many auctions as possible. Watch the tactics used by other bidders. Find out what similar properties have sold for. Know you’re the suburb inside and out. By the time you put your hand up at auction you’ll be well informed and fully aware of what you’re bidding for and how to bid for it.
Read the fineprint
When possible, ask the agent to provide you with a copy of the documentation prior to auction day, ideally at least one week before. Read through all the paperwork related to the auction beforehand and/or have your solicitor read it for you.
Always ask if you are unsure of anything as it is vital to clarify details such as settlement terms, deposit and fixtures before the auction commences, rather than after you’ve bought the property!
What can you spend?
Understand how much you can spend, make sure you set yourself a limit (and stick to it!). And don’t cut it off at an even number because sometimes as little as $100 is the difference between being the buyer and being just plain disappointed.
Make sure you can be seen and heard
You could be one of 50-100 people in a busy auction crowd and unless you make yourself clearly visible & audible you run the risk of having the auctioneer miss your bid entirely.
Stand in clear sight of the auctioneer, voice your bidding clearly and confidently and avoid using sign language that could be misunderstood.
Slowing down the bidding
If the bidding is increasing in larger amounts than you’re comfortable with, you can offer a lower amount as your bid. The auctioneer can refuse it, but as they say, there is absolutely no harm in asking!