How to buy at auction
Download the Guide to Buying at Auction.
To buy a property at auction you must BID!
If your bid is the highest bid taken by the auctioneer and is above the vendor’s reserve price you will purchase the property.
If your bid is the highest bid taken by the auctioneer but hasn’t reached the vendor’s reserve price then the property will be passed in. You, as the highest bidder, will have the first opportunity to buy the property at the vendor’s reserve price. The Auctioneer will clearly announce when the property is on the market and is going to be sold.
If the property is passed in on a vendor bid then the vendor via the vendor’s agent is at liberty to discuss the purchase of the property with any genuine buyers.
Brief Auction History
Auctions have been recorded as far back as 500BC. The Romans used auctions extensively and since then this method of sale has been continually used throughout the ages.
The first land sales in Victoria were held on June 1, 1837 when 100 blocks of land were sold by auction in what is now known as the Melbourne CBD.
Property has been sold consistently via the auction system since that time. On February 1, 2004 the Victorian Government introduced changes to the legislation pertaining to the conduct of real estate auctions. This brochure outlines those changes and some questions that are frequently asked.
Adrian Butera, Director of Compton Green, is a prominent Auctioneer. He was the REIV Senior Auctioneer Winner in 1999, 2001 and 2004 and the Grand Finalist in the National Championships in 1999 and 2005. He has been teaching Auctioneering since 1996.
Frequently Asked Questions
What is a vendor bid?
It is a bid made on behalf of the vendor (owner) not a buyer.
Who can make a vendor bid?
Only the auctioneer.
Does the auctioneer have to declare a vendor bid each time it is used?
How many bids can a vendor make?
There is no restriction but our policy is generally limited to a maximum of 2 or 3 vendor bids.
What is a reserve price?
The price below which the vendor will not sell. This price may vary.
What does “passed in” mean?
The bidding has not reached the vendor’s reserve price and the property is not sold.
If the property is “passed in”, who gets the first opportunity to buy the property?
The highest bidder.
If the property is “passed in” on a vendor bid, what happens then?
The vendor via the vendor’s agent is at liberty to negotiate with any genuine buyer.
Do I have to register prior to bidding at an auction?
Not in Victoria.
What is a genuine bid?
All bids are genuine; there are vendor bids and buyer bids.
What is a buyer’s advocate?
A person who is commissioned to act on behalf of a buyer (if you use one, make sure this person is a licensed estate agent and a member of the REIV).
Do I need to pay a 10% deposit if I buy today?
Yes. If the contract calls for 10% or the vendor agrees to a lessor amount.
Must I sign the contract on the day of the Auction if I buy?
Yes. To buy on the day you must sign a contract and pay a deposit.
Can I cool off if I buy under Auction conditions?
No. The law does not allow you to cool off if you buy under Auction conditions.
Real Estate Auction Rules
|Compton Green are members of the REIV and conduct all their auctions in accordance with the Institute guidelines.|
REIV Auctioneer Statements at Public Auctions Required under the Sale of Land (Regulations) 2004
The Auctioneer must read out the following words by law at the commencement of the auction.
By law, the auctioneer must advise you that:
- Today’s auction will be conducted in accordance with the rules in Schedule 1 of the Sale of Land Regulations 2004 and any additional conditions that were made available for inspection before the start of the auction.
- The auction rules permit the making of bids on behalf of the vendor.
- The law prohibits the making of vendor bids other than by the auctioneer.
- During the auction, the auctioneer will say, “ VENDOR BID”, when making bids on the vendor’s behalf.
- The auctioneer will indicate bidders on request.
- The law prohibits a person from falsely claiming or falsely acknowledging that he or she made a bid.
- The law prohibits an intending bidder or a person acting on behalf of an intending bidder from intentionally preventing or causing a major disruption to the auction.
- The law provides for substantial penalties for any person who engages in prohibited conduct.
Download the Guide to Buying at Auction.