bidding
a guide to bidding at an elders auction
If you are thinking about buying a property at an auction, you need to be well informed
about your rights and responsibilities. This ‘guide to bidding at auction’ has been created
to assist Buyers to understand the process of buying at auction as well as how to prepare
to bid at auction.
Because buying at auction can be a nerve racking experience it is a good idea to attend an
auction or two as a spectator to familiarise yourself with the auction process.
Also take the time to find out what prices properties in the area have sold for, so you have
a guide to the market value of the home you want.
what’s inside?
what is an auction?
the auction process
advantages to buying at auction
auction conditions & rules
how to register to bid
bidding process explained
successful bid process explained
frequently asked questions
what is an auction?
An auction is a type of real estate transaction where
the sale is awarded to the highest bidder.
It allows interested Buyers to make competitive bids
or offers in a transparent and public environment,
under the guidance of a skilled Real Estate Agent and
Auctioneer.
Interested parties may submit an offer prior to auction
day and the Seller reserves the right to accept the
offer and end the auction campaign.
the auction process
(on the day)
Before the auction commences the Seller will
authorise a minimum sale price, called the ‘reserve
price’ to the Auctioneer. The reserve price is not
revealed to Prospective Buyers prior to the auction.
The Auctioneer is not permitted to sell the property
below the reserve price.
The auction is opened with the Auctioneer
announcing the features of the property and any
relevant details such as restrictions on the title, the
deposit required and whether the Auctioneer will be
making ‘Vendor Bids’ on behalf of the Seller. The
Auctioneer then calls for, or announces an opening
bid. The price is raised progressively as the Auctioneer
accepts more bids.
When the reserve price has been reached or exceeded,
the Auctioneer will usually indicate this to the crowd by
saying “this property will sell today” or “this property
is now on the market” or something similar.
The person who makes the final bid must then
complete the transaction by formally signing their offer
to buy.
When a property is sold at auction, a deposit of 5% or
10% of the purchase price is required to be paid when
the sales contract is signed (immediately after the
auction has concluded). The remainder is paid at the
date of settlement, which is usually 30 days after the
auction date.
If the auction fails to reach the reserve price, the
property will be ‘passed in’. The Auctioneer is required
by law to give the highest bidder at the time of passing
in the property, the first right of refusal or the first right
to negotiate to buy the property.
advantages of buying at
auction
- You are bidding to purchase a property in an open
and transparent manner.
- You know that you are purchasing the property at
true market value.
- No Buyer has advantage over another Buyer on
auction day.
auction conditions & rules
This auction is being conducted under certain
conditions that are set by law.
- The auction will be conducted in accordance with
REIWA’s (Real Estate Institute of Western Australia)
Code of Conduct.
- The law permits the Auctioneer (and only the
Auctioneer) to make bids on behalf of the Seller,
known as a ‘Vendor Bid’.
- During the auction, the Auctioneer will say ‘Vendor
Bid’ when making bids on the Seller’s behalf.
- The Seller is required by law to show if they intend
to bid as outlined above and how many bids they
intend to make (outlined in the Auction Particulars
and Conditions of Sale of Freehold Property form).
The Seller is permitted to make up to 10 vendor bids
throughout the auction.
- The law prohibits a person from falsely claiming or
falsely acknowledging that he or she made a bid.
- The law prohibits an intending bidder or a person
acting on behalf of an intending bidder from
intentionally preventing or causing a major
disruption to the auction.
- When you buy at auction the purchase is an
unconditional cash sale, therefore all inspections
such as pest, building etc must be conducted prior
to the auction and will not form part of the Contract.
- Finance must be approved prior to auction.
- The successful Buyer is the highest bidder, subject
to any reserve price.
- If you are the successful Buyer, you must pay a
deposit at the time of signing the contract
(immediately after the conclusion of the auction).
- The Auctioneer has no authority to accept a late bid,
that is, a bid after the fall of the hammer.
Registering to bid is not committing you to bidding at the
auction, it simply allows you the opportunity to bid.
how to register to bid
who needs to register
details to be included in the bidders record
Whilst registering to bid at an auction is not a legal
requirement in Western Australia, it is a requirement
of Elders Real Estate for Buyers intending to bid at an
Elders Auction.
The details that you will be asked to provide for the
Bidders Record are:
You can either pre-register before the auction day or
register on the auction day itself (prior to the start of
the auction).
bidders record
For each Elders auction, a Bidders Record will be
made of the parties registered to bid at the auction
and each bidder will be given a bidder’s number to
display during the auction to identify themselves.
If you are bidding to buy the property jointly with
another person or person’s, only one of you needs to
register and show proof of identity (the person who
will be bidding is the person required to register).
If you are attending the auction, however you have
brought a family member or friend to bid on your
behalf, you are required to provide a letter
authorising the other person to bid for you (both
yourself and the person bidding on your behalf will be
required to show proof of identity).
The information in the Bidders Record will not be used
for any other purpose, it will NOT be used to contact
bidders and the details it contains cannot be
disclosed to anyone else, including the Seller.
The Bidders Record will be destroyed at the
settlement of the property, no copy will be kept on
file.
photographic proof of id
The requirement is that the photographic proof of
identity must show the bidder’s name and address
and must be issued by a government authority. A
current Australian drivers license or Australian
passport is an example of acceptable proof. You are
not required to provide a copy of your proof of id, the
Real Estate Agent will sight the ID and simply make a
note of the document number on the bidders record.
- Your name, address, contact number.
- If you are a licensed agent acting for a buyer (your
licence/registration number).
- If you are bidding for a company, you are required to
provide a letter (on company letterhead) authorising
the person to bid, please also provide the company
ABN.
- If you are bidding for another party, you are required
to provide a letter authorising you to bid on their
behalf.
pre-register (before the auction day)
You are able to pre-register to bid, that is register prior
to the auction day.
Please contact the Real Estate Agent to arrange a
meeting time and venue to conduct the registration.
If you have pre-registered to bid, on the day of the
auction, you are only required to attend the
registration table to show photographic proof of ID to
receive your bidders number.
late arrivals
If you arrive at the auction after the commencement of
the auction you are not prevented from bidding,
however you will be required to register and obtain a
bidders number before the Auctioneer can take your
bid.
Please make your way to the registration table to
complete the registration and receive your bidders
number.
If you arrive at the auction at the crucial point where
it is necessary for you to make your bid immediately,
please raise your hand to indicate to the Auctioneer
that you wish to make a bid. It should only take a
moment for Agency Staff to note your details from your
proof of identity and hand you a bidder’s number.
View Sale Documentation
bidding process
explained
Inspect The Property
Attend scheduled home open and/or private viewing.
Arrange Finance
Preparation is essential! Auction sales are not subject
to finance, therefore it is recommended that you have
prefinance approval. If you haven’t already spoken to
your financier, do so as soon as possible. You will be
required to settle within 30 days of the auction
therefore your financier will require time to prepare.
You will also need to have available the amount of
the deposit (usually 5% or 10% of the purchase price)
ready to pay at the close of the auction when the sales
contract is executed.
OPTIONAL - Arrange Inspections
Auction sales are cash unconditional sales and
therefore the contract will not be subject to any quality
inspections; such as a building or pest inspection. If
you would like to conduct these inspections, you will
be required to arrange them (at your cost) prior to the
auction. Please discuss with the Real Estate Agent.
Any findings from the inspections will not factor into
the Contract, therefore the reports are purely for your
information only, and are to assist you to decide
whether or not you are prepared to purchase the home.
The Auction Particulars and Conditions of Sale of
Freehold Property form outlines details of the auction
date, certificate of title, location of property, chattels,
any encumbrances or restrictions on the land, zoning
and use, any tenancy agreements and arrangements
for the payment of the purchase price.
The details within this form are read out by the
Auctioneer prior to commencing the auction, however
you may seek to obtain a copy from the Auctioneer
prior to the auction.
If the property sells at auction this form becomes part
of the sales contract and is signed by the Buyer and
the Seller’s Agent.
Once signed, the requirements of the sales contract
are legally binding on both the Buyer and Seller, so it
is important that you are aware of the conditons prior
to bidding at auction.
Register Prior To The Auction
It is not a legal requirement in WA to register to bid
at an auction, however the processes and procedures
of the Elders Easy Auctions require registration of all
bidders.
Either prior to the auction day or on the day itself (prior
to the auction starting), Elders require you to provide
the Real Estate Agent your name and address and
show photographic proof of your identity. Your details
will be recorded by the Real Estate Agent in the
Bidders Record and at the auction you will be given a
bidders number.
Even if you have registered prior, you will also be
required to show photographic proof of ID on the day
of the auction to obtain a bidders number, so please
allow plenty of time prior to the start of the auction.
Auction Day - Before you leave home
Conduct Research
Inspect the property carefully and do your own checks
through the local council and other relevant
authorities prior to attending the auction.
It is important that prior to bidding you have formed
your own view about the value of the property. You will
not be able to rely on the actions of other bidders to
give you an idea of the property’s value.
DO NOT LEAVE HOME WITHOUT YOUR PHOTOGRAPHIC
PROOF OF ID.
Auction Day - Arrived at auction
Arrive with plenty of time. The property will generally
be open for viewing for 30 - 45 minutes prior to the
start of the auction.
Attend the registration table to show photographic
proof of ID and receive your bidders number.
GET READY TO BID!
successful bid process explained
Bid Accepted !
If you are the winning bidder at the auction
CONGRATULATIONS!!!
Please DO NOT leave the premises, you are required
to sign the contract and pay the deposit immediately.
Sign Contract
At the fall of the hammer you are required to remain at
the premises and immediately sign the contract
(3 x copies) with the Real Estate Agent and the Sellers.
Appoint Settlement Agent
It is important to appoint a Settlement Agent ASAP to
begin the process of the transfer of land and to book
the settlement.
When you have nominated a Settlement Agent, please
email their company name, contact name, email
address and phone number to the Real Estate Agent.
The original signed contract will be forwarded to your
Settlement Agent along with other relevant
information.
A copy will be provided to you for your records at the
time of signing.
We work closely with your Settlement Agent
throughout the process, keeping them up to date on
the progress of the contract, corresponding with them
frequently.
Pay Deposit
Settlement
In accordance with the contract, you are required to
transfer the deposit funds to the Elders Sales Trust
Account immediately at the conclusion of the auction.
Providing that the Contract terms are met, the general
conditions provide that the Buyer is entitled to the
keys at Settlement.
When transferring the funds please enter your name
and the address of the property into the ‘description
cell’, this will help us to identify the funds.
If immediately prior to the Settlement the Seller
occupies the property as the Seller’s principal place
of residence then the Seller may remain in occupation
until 12 noon on the day following Settlement. If that
is the case then the Buyer will not be entitled to the
keys until 12 noon on the day following Settlement.
Many banks have a restriction on the amount that can
be electronically transferred, therefore it is
recommended that you speak to your bank prior to
the auction to arrange the ability to transfer a large
amount in the one transaction.
Your Real Estate Agent will keep you informed as to
when keys will be available for you to collect from our
office.
Please note; this process only outlines the involvement that
we have with you as your Real Estate Agent. It does not
include the process that you will follow from acceptance of
offer to settlement with your nominated Settlement Agent.
frequently asked questions
What is a reserve price?
What is the Joint Form Of General Conditions?
The price below which the Seller will not sell.
The Joint Form of General Conditions for the Sale of
Land which forms part of the Contract are additional
conditions to those already incorporated or written
into the Contract for the Sale of Land/Strata Title by
Offer and Acceptance.
What is a vendor bid?
It is a bid made by the Auctioneer, on behalf of the
Seller.
How many vendor bids are allowed?
Up to ten vendor bids are permitted throughout the
auction. The Seller is required by law to show if they
intend to bid and how many bids will be made
(outlined in Auction Particulars and Conditions of Sale
of Freehold Property form).
What does ‘passed in’ mean?
The property has not sold as the bidding has not
reached the Seller’s reserve price.
What happens if the property gets ‘passed
in’?
The highest bidder at the close of auction is afforded
the opportunity to negotiate with the Seller. If the
negotiation with the highest bidder does not progress,
the Real Estate Agent will contact other bidders to
encourage them to submit an offer.
If the property was ‘passed in’ on a vendor bid, the
Real Estate Agent is at liberty to negotiate with any
genuine buyer.
Can I submit an offer prior to the auction day?
Yes, you are able to submit an offer prior to the
auction day. The Real Estate Agent will generally (on
the Seller’s instructions) invite all Prospective Buyers
to also make an offer. The Seller then accepts the most
appropriate offer.
When thinking about submitting an offer; consider:
- It will need to be a very good offer to convince the
Seller not to go to auction.
- When a property sells at auction it is a cash
unconditional sale which will settle in 30 days, it is
not subject to finance or any other conditions;
therefore it would be wise to put forward an offer
which is similar.
The Joint Form of General Conditions for the Sale of
Land largely clarify areas where there is the potential
to have a legal dispute about the Contract, the
Property, or the Settlement of the Property.
What are the RCD and smoke alarm laws?
Under legislation introduced in 2009, Seller’s of
residential properties are required by state law to have
two RCD’s installed at the property and hard wired
smoke alarms. These safety devices must be installed
by the Settlement Date.
There can be an exemption where the Buyer will be
demolishing the property. A specified date for the
demolition must be nominated and cannot be more
than six months from the date of transfer.
The regulations mainly affect properties where
construction commenced before 2001, when it became
compulsory to fit at least two RCD’s and hard wired
smoke alarms in all newly constructed dwellings.
An electrical safety certificate completed by a qualified
electrician will be provided to nominated Settlement
Agents by the Seller to provide evidence that it meets
legislation.
Do I provide my Settlement Agent with a copy
of the Contract?
No. In any real estate transaction the Buyers
Settlement Agent must be provided the Original
Contract (it can not be a copy). Upon receiving contact
details for your Settlement Agent, Elders will post the
Original Contract directly to them.
Where is my Deposit held?
The Deposit is held in the Elders Real Estate Sales
Trust Account. We are required to hold the deposit
until the Settlement Date. On the day of Settlement,
your bank will transfer your funds for the purchase of
the property (minus the amount of the deposit held) to
the Sellers bank.
The Sales Trust Account is a non interest bearing
account.
What happens if Settlement is delayed?
Both parties have a 3 Business Day grace period after
the Settlement Date for Settlement to be completed.
If Settlement is delayed beyond the 3 Business Day
grace period, whomever is responsible for the delay
(Seller or Buyer) may be required to pay to the other
party at Settlement interest on:
- The balance of the Purchase Price; and
- Any other money payable at Settlement
Interest payable and compensation allowable (as
outlined above) is to be calculated:
- At the Prescribed Rate; and
- From and including the Settlement Date but excluding the date on which Settlement occurs
And will be treated as being in full satisfaction of any
claim the Party claiming interest or compensation has
against the other Party as a result of the delay in
Settlement.
We, as Real Estate Agents are not involved in the
calculations or collection of penalty fees for the delay
in settlement. It is handled by the parties nominated
Settlement Agents.
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Date Created: 6th February 2015