How does the home auction process work in Australia?
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Buying and selling houses at auction is hugely popular in Australia. The following is a basic guide to how the home auction process works.
Registration of Interest
Once you’ve found a property, by law, you need to contact the real estate agent and register your interest (laws vary state by state; for example, bidders don’t need to register in Victoria).
You will need to show proof of identification so take your passport, driver’s licence, credit card and bill with your name on it. You will then be issued with a bidder number which you will show every time you bid.
Registering interest does not mean you are obligated to bid. If you haven’t registered beforehand with the agent, you can do so on the day.
If you are bidding jointly, only one person needs to register but they will also be the only one allowed to bid.
All properties up for auction have a ‘reserve’ price, which is the lowest price the seller is willing to accept. It is usually set just prior to the auction and is confidential. To get an idea of the reserve, research recent sales of equivalent properties in the area, or employ the services of a professional valuer.
Tip: If the vendor is receptive, you can make an offer prior to the auction.
Once the reserve price is met or surpassed, the property is sold to the highest bidder on the fall of the hammer. The winning bidder must then sign a Contract of Sale and pay a deposit, usually 10%, on the day. The successful buyer must also have their finance pre approved by their lender. Failure to finance the sale may result in the loss of your deposit.
If the highest bid is below the reserve price, the property will be passed in. The person who made highest bid is usually given the chance to negotiate with the seller.
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