Did you know that New South Wales, Victoria, Queensland, South Australia, Western Australia, Tasmania and Northern Territory all have different rules and regulations in how property auctions are run, even though all these states are based in one country?
The above-mentioned is what makes property auctions in Australia a whole different ball game, that’s why we’ve decided to compile this mini guideline on all the things you should be aware of should you ever be interested in purchasing a property on auction in Australia.
Due to the low supply of housing and the high demand for prime residential properties, particularly in suburbs such as Sydney and Melbourne, also known as “hot” property markets, when a property is on offer, a fierce bidding war ensues. As a result, private treaty sellers opt to run auctions on “hot” market properties, to increase the value of the offers to purchase the respective property.
Regardless of how lucrative auctioning properties in “hot” market areas is, there are specific regulations that apply to all bidders and auctioneer agents irrespective of where they are based in Australia.
The Process & Regulations
According to Open Agent, these regulations state that there is no cooling-off period with sales via auction. Therefore, you need to be 100% certain that you truly want to purchase the specific property and have done all the necessary due diligence on the property to avoid any unexpected and very expensive surprises. Although opening an auction by placing a dummy bid In South Africa is allowed, in Australia raising the price of the property on auction via the seller or their friends without alerting other participating bidders about this is illegal. Once the highest bidder has been declared and they have agreed to pay the amount they bid on the respective property, the auctioneer is required to present a legally bidding joint form (a sales contract) that the highest bidder needs to sign to confirm that they will follow through on paying for the property they have offered to purchase and will be able to pay a 10% of the property immediately after the auction sale.
Should things go pear-shaped and the property’s reserve price not be met then that property is “passed in,” meaning the property is not sold on auction and then the seller will have to negotiate with the highest bidders on how much they are willing to purchase the property for. Although this is not desirable, it is a much better option than having the property placed back on the property marketplace.
If you’re interested in participating in an Australian property auction, According to the Government Of Western Australia’s Department of Mines, Industry Regulation and Safety these are the things you should do to ensure that your consumer rights are protected: