Selling property by auction
A property auction is a public sale:
There is an advertising campaign with open house inspections for several weeks leading up to the auction date. The vendor does not have to advertise a reserve price or advise the agent of their lowest acceptable offer.
On the day of the auction the property may be open for inspection, for at least half an hour before the bidding starts. For more information on the rights of landlords, agents and renters in relation to open for inspections, view ourLandlord or owner entry to the property page.
Buyers can make an offer through an agent before an auction if you agree to consider pre-auction offers. This will usually be in the form of a signed contract and the process of negotiation is the same as buying property by private sale.
If the offer is accepted less than three clear business days before the auction date, the buyer does not get a cooling-off period.
There are strict rules about how an auctioneer runs an auction, and how people attending one must behave. Substantial penalties may apply to anyone who breaks these rules.
The auction rules and an information sheet that explains auction laws in Victoria must be displayed for at least 30 minutes before the auction starts. The rules and information sheet are set out in the Schedules to the Sale of Land (Public Auctions) Regulations 2014, which also set out the announcements an auctioneer must make.
Before bidding starts, the auctioneer must tell bidders:
During the auction, anyone can ask the auctioneer a reasonable number of questions about the property, the contract, or the auction.
The auctioneer may:
Vendor and co-owner bids are allowed at auctions
If these bids are to be made at an auction, the arrangements for making vendor and co-owner bids must be:
The auctioneer can bid on your behalf if you are not satisfied with the amount of the last bid. This type of bid:
When a property is jointly owned, one or more of the owners who genuinely wants to buy the property may bid from the crowd.
Co-owners may bid themselves or through a representative in the crowd, but not through the auctioneer.
The arrangements for vendor and co-owner bids must be:
It is illegal for you to bid from the crowd, or to ask another person to bid on your behalf, to increase the price for your property.
All dummy bids are illegal and attract significant penalties.
A dummy bid is either a:
The auctioneer may halt proceedings and say they are ‘going inside’ or ‘seeking advice or instructions’. The auctioneer will speak to you privately about the progress of the bidding.
If the bidding is close to or has reached your reserve price (the lowest price at which you will sell), the auctioneer will ask if you will sell at the last bid or any higher bid that is made.
Should you agree, the auctioneer will tell the crowd that the property is ‘on the market’. This means the property will be offered for sale to the highest bidder.
If bidding has not met your reserve, the auctioneer will seek more bids. If bids still do not meet the reserve, the property may be ‘passed in’ or ‘withdrawn from auction’.
If bids do not meet your reserve or other price at which you are willing to sell, the property will be ‘passed in’.
The highest bidder then has first right to negotiate with you. This includes if the property was passed in on a vendor’s bid.
There is no legally binding contract until you and the successful bidder at auction have signed the contract of sale.
Immediately after the auction, the successful bidder is invited to sign the contract to formalise their offer. You can accept the offer by also signing the contract. You and the buyer will each receive a copy of the signed contract.
As this is an auction, the buyer must pay a deposit upon signing the contract and cannot make the contract subject to conditions.
Some buyers may not have a full deposit on the day of the auction. You may agree to change the contract to allow for a part deposit, with the remaining amount due on a specified date.
The buyer has no cooling-off period for a property purchased at auction.
The sale is finalised at settlement when:
If your property is passed in and is not later sold to the highest bidder, it may be offered for private sale or taken off the market.