An auction is a public sale, usually conducted by a real estate agent acting as an auctioneer. Auctions are advertised for a specific place, time and date. Buyers bid and the property is offered to the highest bidder. By bidding you accept the terms of the contract on display before the auction.
Buying at an auction is often cheaper than buying privately or from a trader. But it carries more risks and is best suited to consumers who knows about the products they are purchasing.
At auction consumers should inspect the item as they generally will not allow you to test drive or sample a product. The auction house is responsible for ensuring that there is no money owing on a product they are auctioning.
If buying a product at auction, you should set a limit on how much you would like to spend, and stick to it. Be aware if you buy a property at auction, you cannot make the contract subject to conditions (e.g. getting finance) and there is no cooling-off period.
You can make an offer through an agent prior to the auction if the seller has agreed to consider pre-auction offers. Your offer will usually be in the form of a signed contract and the negotiation process is the same as buying by private sale.
There are strict rules about how an auctioneer runs an auction and how people attending must behave. Auction rules and the auction information statement (which outlines Tasmania's auction laws) must be on display prior to and during an auction.
Before the auction starts, the auctioneer must inform all potential bidders of the following:
- the auction will be conducted according to the auction rules
- the rules prohibit bids being accepted after the fall of the hammer
- bidders will be identified on request
- it is illegal to make a false bid, hinder another bidder or in any way intentionally disrupt an auction
- if there will be vendor or co-owner bids
- any additional conditions that apply to the auction.
During the auction anyone can ask a number of questions about the property, contract or the auction. If you are bidding you can also ask the auctioneer to indicate who else made a bid.
Bidding at auctions
- Auctioneers aim to encourage as many bidders as possible to compete in order to achieve the highest possible price.
- The auctioneer can set the amount by which the bids increase. These are called rises or bidding advances.
- You can bid at the amount stated by the auctioneer or offer an alternative amount.
- A dummy bid is either:
- a false bid made up by the auctioneer; or
- a bid accepted by the auctioneer from a non-genuine bidder from the crowd.