Buying at Auction

An auction is a public bidding process with a set date and contract terms. It can be straightforward when you prepare early, understand what you are buying and know your limit. Ray White Barrington’s salespeople can explain the property’s campaign and auction arrangements, while your lawyer, lender and independent advisers help you decide whether you are ready to bid.

Register your interest early

Tell the listing salesperson you are interested so you can receive relevant property information and updates, including a proposed pre-auction offer or change in timing. Confirm the venue or online process, registration requirements and how you can bid if you cannot attend. Attending another auction first can help you understand the pace without pressure to buy.

Complete your property and legal checks

• Ask for the property documents and have your lawyer review the title, auction conditions, chattels, settlement date and any special clauses.
• Investigate the property’s condition with an appropriately qualified building inspector and any other specialist required. Read disclosures and ask about earthquake assessments, repairs and supporting records where relevant.
• Review the LIM and relevant council records, including alterations and consent/completion information. Do not assume a supplied report answers every question.
• Confirm insurance acceptable to you and your lender, including any property-specific requirements or exclusions.

Our buying guide explains these checks in more detail. Ask questions while there is time to investigate, not only on auction day.

Confirm finance, deposit and terms

A successful auction bid is normally an unconditional commitment on the auction terms. Conditional home-loan preapproval is not enough on its own. Have your lender confirm that you can borrow for this particular property and complete your legal and technical checks before bidding.

Read the documents for the deposit amount, payment arrangements and settlement date. A 10% deposit is common, but the actual auction terms govern. If you need a different deposit or settlement arrangement, ask the salesperson well before the auction. Any variation needs the seller’s agreement and must be properly documented before you bid.

Set a maximum you can comfortably afford, including purchase costs and a reserve for ownership expenses. Agree your bidding plan with anyone buying with you. You do not have to exceed your limit because another bidder is still competing.

Understand reserve prices and vendor bids

The reserve is the minimum price the seller is prepared to accept at the auction. Listen to the auctioneer’s announcements and ask about anything you do not understand before bidding starts. Make your bids clearly so the auctioneer can recognise them.

A vendor bid is different from a competing buyer’s bid. Where permitted, it must be below reserve and clearly identified as a vendor bid, with the required notice that vendor bidding may occur. It must not be represented as an independent buyer. The Commerce Commission explains auction and vendor-bidding rules.

What happens after bidding?

If the reserve is met and you are the successful bidder when the property is sold, you are committed under the auction terms. Be ready to complete the paperwork and pay the deposit as required. If the reserve is not met, the property may be passed in. The salesperson can explain any subsequent negotiation process; do not assume a conditional offer will be accepted or that the highest bid has secured the home.

If a property is advertised as available for sale before auction, discuss the pre-auction process with the listing salesperson and your lawyer. Making an early offer does not remove the need for finance and due diligence.

Get ready with the right information

Read Settled’s auction guide and the approved residential sale and purchase agreement guide supplied during the process. For a particular property, contact its listing salesperson. To start your search, view our upcoming auctions or call 03 332 2080.