Auction etiquette: Dos and don’ts
Whether you are a first-time bidder or an experienced property investor, there are unwritten rules about how to conduct yourself at auction. Make sure you understand these auction dos and don’ts before making a bid.
Different rules for different jurisdictions
Depending on where you are buying property, there may be different rules according to state laws. For example, in Victoria anyone can bid on a home and there is no legally binding agreement until the contract of sale is signed. In New South Wales, however, only potential buyers who have registered with the vendor’s agent may bid on a property. In many jurisdictions, the highest bidder also has the first right to negotiate if the property doesn’t reach its reserve price and is passed in.
In our post-pandemic world, there are factors to consider with online auctions. While the number of digital auctions has cooled somewhat now that we are out of lockdown, some vendors are still choosing to go down this route. In many instances you will need to sign up with the vendor’s agent and get a secure link to the online auction. You will then need to join at the right time and ‘bid’ in the room.
Top 5 tips to prepare for an auction
Think you’re ready to take the plunge and buy a home at auction? Make sure you ask yourself these five questions first:
- Are my finances sorted? This may involve getting pre-approved for a certain limit with your lender and ensuring your auction deposit is ready to be paid if you have the highest bid.
- What’s my limit? It can be risky going into an auction without a firm ‘maximum limit’. Also, don’t get drawn into the emotions of the day – if someone is easily outbidding you, that’s a clear sign that this isn’t the right property for you.
- Do I know the state of the market? Make sure you’ve visited other auctions in the area so you understand the general sale price of similar properties.
- What are my next steps? Do you know how the post-auction process works if you win, such as signing contracts, paying the deposit, speaking to your bank and ensuring all your paperwork is ready to be processed? Also, make sure you’ve considered what type of home and contents insurance you want.
- Do I want to run things myself? If the emotional rollercoaster of an auction just isn’t for you, or if you’d prefer an experienced hand to act in your place, you might want to consider engaging a buyer’s agent.
Good auction etiquette: What to do
All might be fair on the auction battlefield, but there are still some general etiquette rules to follow – both before and after the auctioneer’s hammer falls.
Number one is to stay quiet during the auction. Bidders are eagerly listening to the auctioneer to understand what price the property is currently going for. You don’t have to say a word when you make a bid – just raise your hand or paddle, nod your head or indicate to the auctioneer that you are bidding. Speaking of the ‘auction paddle’, keep it by your side unless you are ready to bid – this way, there’s less chance of you making incorrect bids during the auction.
You will also want to learn the lingo before attending. From ‘proxy bids’ to ‘cooling-off periods’ to ‘unconditional sales’ and everything in between, it’s your responsibility to know what the auctioneer is talking about!
Poor auction etiquette: What NOT to do
At the other end of the scale, there are some very serious no-no’s around bidding at auction.
The biggest? Don’t make a bid unless you are willing to go through with the sale if you win. It not only causes headaches for the vendor and agent, but if you sign the contract and then change your mind or can’t afford the final price, you may end up losing your entire deposit.
Similarly, don’t be a sore loser. There are very few homeowners who have only ever attended an auction they’ve won. Real estate is a competitive industry, and everyone wants their dream home. If someone else bids more than you on the day, it just means your ideal property is still out there.
The winning bid
Auctions can be both exhilarating and exasperating, but hopefully these tips will see you come out on top. When you’ve made the winning bid, make sure you look into home and contents insurance for your wonderful new home. Start comparing a range of policies with Choosi or call 13 55 55 today.
10 May 2022