A real estate auction is a type of public sale where a property is sold to the highest bidder. An auction takes place in front of a live audience.
Buying property at auction – Consumer Affairs Victoria
An auction is advertised for a specified place, time and date, usually by newspaper advertisement or online listi
Prospective buyers inspect properties during the pre-auction period and make bids for the property. If no one makes a successful bid, the owner decides whether to sell it to the next highest bidder or hold onto it for another day.
The auction process involves the following steps:
1. Advertising the auction for a specified location, date and time
2. The auctioneer opens bidding on the property
3. Bidding continues until someone buys the property
4. The winning bidder pays the seller the amount he/she has bid
5. The buyer receives title to the property from the seller
6. The buyer must pay any outstanding liens against the property
7. The buyer may be required to provide proof of funds (cashier’s check)
8. The buyer signs an agreement with the seller that states the buyer will complete all work necessary to bring the property up to code within 30 days
9. The buyer completes the purchase transaction
10. The buyer is responsible for paying any taxes due on the property
11. The buyer is responsible to pay any fees associated with the transfer of ownership
12. Thebuyer is responsible if there are problems with the property after the closing
13. The buyer is responsible of any repairs needed before moving into the property
14. The buyer is responsible when selling the property
15. The buyer is responsible should the property not sell at auction
16. The buyer is responsible in case the property does not sell at auction
17. The buyer is responsible upon failure to close escrow
18. The buyer is responsible if the property sells for less than what was expected
19. The buyer is responsible on any damages caused by the property
20. The buyer is responsible as soon as possible after the auction ends
21. The buyer is responsible once the property is sold
22. The buyer is responsible even if the property is damaged prior to the auction
23. The buyer is responsible after the auction if the property is not sold
24. The buyer is responsible whenever the property is sold
25. The buyer is responsible regardless of how much money the property brings at auction
26. The buyer is responsible whether the property sells at auction or not
27. The buyer is responsible whatever happens to the property
Due diligence checklist
All sellers, or estate agents representing them, must make sure potential buyers are aware of any issues affecting the sale price of the property, including buying into an owners corporation or flood or fire risk.
The National Association of Estate Agents (NAEA), together with the Government Property Unit (GPU), has launched a free due diligence checklist for homebuyers.
The checklist covers areas such as building regulations, flood and fire risks, and insurance coverages for recent work.
It advises buyers to check the following items:
• Building regulation compliance
• Flood risk assessment
• Fire risk assessment
• Insurance coverage for recent works
• Ownership structure
• Compliance with relevant legislation
• Current council rates
• Council planning approval
• Land titles
• Leasehold status
• Tenancy rights
• Legal advice
• Environmental impact statement
• Title search
• Valuation report
• Water supply
• Sewage disposal
• Gas safety certificate
• Electrical safety certificate
Pre-auction offers
If you want to buy something online, chances are you’ve seen the term “pre-auction offer.” This refers to a type of bidding system where buyers submit bids prior to the auction. In most cases, the highest bidder wins the item. Pre-auctions are common among ecommerce sites like Amazon because it allows sellers to sell items quickly without having to wait for the auction to end. They also allow buyers to place multiple bids to win the item.
In some cases, sellers accept pre-auction offers. You can use this method to buy things like cars, real estate, art, antiques, collectibles, jewelry, etc. However, there are limitations. For example, you cannot purchase anything over $10,000, and you must pay the full amount up front. Also, you don’t receive a refund if you decide to cancel the transaction.
Auction conduct
There are strict rules about how auctioneers run auctions, and how people attending an auction must behave. An auctioneer can choose whether to use an open or sealed bid system. In an open system, bidders simply state what they want to pay without having to sign anything. In a sealed system, bidders write down bids on pieces of paper and put them into a sealed envelope. If there are no objections, the highest bidder wins.
The auction rules and the auctioneer’s announcement of the sale, including the auction rules and information statement outlining Victoria’s auction laws, must be displayed for at least 30 minutes prior to the start of the auction. This includes displaying it at the place where the property is being sold.
Substantial penalties may apply to those who break the auction rules. These include fines up to $10,000 for each offence.
Bidding at auction
Before you bid:
Research the market, search the Internet, attend auctions, speak to several estate agents and monitor Auction Results. Get independent, expert help on Legal, Finance and Building Matters. Decide your Bidding Limit – that is, how Much You Are Willing To Offer.
Auctioneers have Different Ways of Conducting An Auction. Generally, They Aim to Encourage As Many People As Possible To Bid In Order To Achieve The Highest Possible Price.
Australia real estate auctions
In Australia, there are three main kinds of auctions: residential auctions, commercial auctions, and auctions held by government entities such as public housing authorities. Residential auctions typically take place once per month while commercial auctions occur twice monthly. Auctions held by government entities tend to happen less frequently.
The process begins with the listing of properties for sale by the owner. This information is posted online and advertised via media outlets like newspapers and magazines. Prospective buyers can bid on the listings during a specified timeframe. Typically, the bidding period lasts anywhere from several weeks to several months. During this period, prospective buyers can make appointments to view homes in person. They can also conduct research on the properties by reading reports prepared by professional inspectors.
When it’s time to bid, buyers must pay a fee to register and submit their bids. Each bidder submits his/her highest price along with a written explanation of why he/she believes the property is worth that much. When the bidding period ends, the winning bidder receives the property.
Better rules about pricing, conflicts of interest
In many parts of the world, it’s illegal for real estate agents to sell properties twice.
But in Australia, where salespeople can make big money by representing buyers and sellers in the same deal, double-dipping is commonplace.
The practice is known as “double-endering,” and it’s common across the globe. In Canada, it’s legal, but only if you’re selling your own home.
Real estate agent David Leal says he’s never done it himself. He says he knows plenty of people who do, though. And he doesn’t like what he sees.
Leal runs his own agency in Vancouver. He says he wouldn’t want to work for someone else who does double-endering.
“I think it’s wrong,” he tells As It Happens host Carol Off. “You know, I’m trying to help my client out, and I don’t feel comfortable doing something that’s unethical.”
Double-enders say they aren’t breaking any rules — just following the law. They argue that since they’re representing themselves, they can’t charge commissions to both parties.
