In the fast-paced world of house auctions, the first thing you’ll want to know is if there are any specific auction rules or regulations to familiarise yourself with ahead of time. So before you unpack the board and set up your pieces, let’s get you acquainted with some of the rules you might encounter in the auction game.
All property auctions in Australia follow a specific set of rules or procedures that are regulated by the laws of each state or territory. When you’re ready to roll the dice, it’s wise to review these regulations in your state or territory first — and don’t worry, it’s not cheating to ask your conveyancer or property solicitor to do this for you.
Okay, it’s time to move your first piece! Before you turn up to any auction, there are a few basic boxes that need to be ticked. These are the rules that are set not just for the prospective buyer, but for the vendor as well:
When you’ve found a property you want to bid on, the vendor must first provide a contract of sale. As a prospective buyer, you’re encouraged to read this document yourself. But it’s also highly recommended that you get your conveyancer or property solicitor to review the contract thoroughly to make sure there’s nothing embedded in it that’s unusual or of concern to their highly-trained legal eye. If everything looks good, you’re on to...
In most states, bidders need to register with the vendor before taking part in an auction. This registration process will be handled by the agency responsible for the auction and can be done at the same time as receiving the contract. You’ll be asked to show identification and then be issued with a bidder’s number that you have to display when making your bid. You must have a bidder’s number in order to participate in an auction so come on lucky number 7!
Just like Colonel Mustard in the library with the lead pipe, the reserve price is a piece of information you will not be privy to at the onset of the game. The reserve price is the confidential minimum amount the seller is willing to accept and it must be set prior to the auction. All you’ll know prior to the auction is that there is a reserve and then during the auction, the auctioneer will let you know if, and when, it’s reached.
This rule only applies to the vendor: they must advertise the auction date and the terms of auction prior to the auction. They will also advertise the open home inspection times prior to the auction, allowing potential buyers to view the property before deciding whether they’re interested in attending and/or bidding.
Once you’ve done your due diligence prior to the auction and got all your ducks in a row, you’re ready to move on to the rules of the actual auction day.
Much like the trusted banker in a game of Monopoly, an auctioneer conducts the auction and must follow state-specific rules, such as clearly announcing the property’s status and the reserve price (if it is reached).
When bidding at an auction, bidders must offer their bids openly and clearly. There can be no subtlety or confusion about the acceptance of the auctioneer’s request for a bid, or your own verbal raising of a bid. Bids need to be made blatantly clear and be acknowledged as received by the auctioneer before they move on to continue asking for bids.
While some of us have might have spat the dummy during a game at some tense competitive moment, dummy bidding is a different matter altogether and one that’s illegal in Australia. Dummy bidding is the act of placing fake bids at an auction to artificially inflate the price of a property. It undermines fair competition and misleads genuine buyers, it’s just not cricket.
Here we are saving the biggest and most important rule for last, and who doesn’t like to finish big? Once the hammer has fallen and the auction is concluded, our final auction rule is implemented.
As the highest bidder and the winner of the auction, you must immediately sign the contract of sale and pay the deposit (usually 10% of the purchase price) to make the sale legally-binding. Failure to do this can lead to serious legal and financial ramifications, more so than breaking any of the rules mentioned previously.
If the auction was unsuccessful, i.e., if bidding didn’t meet the reserve price, the property is then ‘passed in’ and the seller can negotiate with interested parties after the auction.
Hopefully the auction was successful though and the final rule can be implemented.
