The auction system is a very popular method of selling a property. All auctioneers and agents in Queensland are required by law to be registered under the PAMD Act. This brochure has been designed to advise prospective buyers at auction on how to prepare for and then go about bidding confidently.

Standard Terms And Variations

There are certain standard terms & conditions incorporated into contracts of purchase by auction. The usual terms require a 10% deposit and a 30-day settlement etc. The standard terms may be renegotiated with the auctioneer prior to the day of auction. Such variations must be recorded in writing and would apply if you were the successful bidder.

Conditions Of Sale By Public Auction For Real Property

1. The highest approved bidder will be the buyer subject to:
   • the reserve price; and
   • the seller's approval.

2. The seller may bid, either personally or by a representative.

3. The bidder warrants their ability to enter and complete the contract of sale in accordance with its terms.

4. Any person bidding on behalf of another person must provide the Auctioneer with a copy of their written authority before the auction; otherwise the bidder will be taken to be acting on their own behalf.

5. The Auctioneer has the discretion to refuse to accept any bid from any person. A bid will be taken to be accepted and irrevocable unless the Auctioneer, immediately after it is made, refuses it.

6. The decision of the Auctioneer is final in all matters relating to the auction and no bidder has any right of recourse against the Auctioneer or the seller.

7. Without affecting condition 6, if there is any dispute over a bid, the Auctioneer may:
   • re-open the bidding and resubmit the property for sale starting with the highest bid previously accepted; or
   • determine the dispute in any other way the Auctioneer considers appropriate in his/her absolute discretion

8. Immediately on the fall of the hammer, the bidder of the highest bid accepted must sign, as buyer, the Contract of Sale in the form displayed or circulated with these conditions of sale and pay the deposit to the nominated stakeholder.

9. The deposit payable under the Contract of Sale is 10% of the successful bid or any other percentage or figure nominated in the Contract of Sale.

10. The seller and the buyer agree to sign all documents and do everything else necessary to transfer the property to the buyer. The seller and the buyer each appoint the Auctioneer their agent to sign the Contract of Sale on their behalf. This appointment is irrevocable.

11. If the buyer does not pay the deposit, at the seller's option:
    • the result of the auction will be treated as invalid and the property may be resubmitted to public auction at the risk and expense of that buyer; or
    • the seller may affirm the Contract of Sale and pursue their legal and other remedies against the buyer as they see fit.

Other special conditions may apply.

Contract For Sale

Based on these conditions of sale, the vendors selling agent prepares the contract of sale. You may choose to have your conveyancer or solicitor inspect the Contract of Sale, which will be held by the agent. This document is available three consecutive business days prior to auction. Make sure that you have a clear understanding of exactly what is to be included in the sale. All fittings, furniture and other items to be included should be clearly itemised. If you have any doubts speak to the agent prior to auction.

Important Aspects

• GST Registration: At the auction the following announcement will be made in clear terms.
  • The property is offered for sale on a GST inclusive basis, which means the knock down price is the sale price.
  • The property is offered for sale on a GST exclusive basis, which means the knock down price attracts GST at 10% of the selling price. (Registered GST Seller).
  • The property is offered for sale under the Margin Scheme, which means that the knock down bid is the sale price and GST payable by the seller is 1111 of the margin. (Registered GST Seller).
• Inspecting The Property: Inspections of the property before the auction are usually conducted in the company of an agent who will know the features of the property and be familiar with all the facilities in the local area. Viewing times will be specified, giving all interested parties equal opportunity to inspect the property before the auction. Inspection at other times by appointment with the agent may be arranged.
• Finance: Should finance be required to purchase the property you must have this approved prior to the Auction. Make contact with your bank, building society or other lending body before you attend the auction. Explain that the property you are interested in is to be submitted to auction and ask them to process your application for finance urgently.
• Registration Of Interest: It is important that you speak to the selling agent and register your interest in the property. It may be that the vendors wish to consider an offer prior to auction and this will allow the agent to notify you, so that you may be given an opportunity to enter in to negotiations for the property.
• Reserve Price: Unless advertised otherwise, all properties are subject to a "reserve price". This is the price that the vendor will be prepared to accept for the property. The auctioneer has no authority to sell under the reserve price, however should the reserve price is equalled or exceeded; the property is "on the market" and can be sold to the highest bidder on the fall of the hammer. When the property is sold under the hammer at auction, the highest bidder is required to sign the Contract of Sale and pay a deposit. It is important to remember that when you buy a property at auction there is no cooling-off period that would normally be available should the purchase be by private treaty.
• Price: The reserve price is generally set just prior to the auction and is confidential. In establishing a price range you should check out what similar properties in the same area have sold for. The lending institution may give an opinion of value, or you may engage a qualified valuer to complete a formal valuation.
• Other Considerations: To know exactly what you are buying, you may consider having the property inspected by a professional. Licensed building inspectors, architects, pest exterminators etc are available and may be found in the Yellow Pages.

Bidding At Auction

To a better understanding of the basic auction procedures it is a good idea to attend several other auctions before the one where you plan to bid. Always make sure you check the scheduled time and place for the auction and make sure you are on time if not a little early. When attending the auction do not hesitate to seek advice or information from the auctioneer or other staff. If you feel uncomfortable with the idea of bidding on the day of the auction, many Real Estate Institute members can be of professional assistance in this area.

When the property is knocked down to you as the successful bidder, you are required to sign the Contract for Sale immediately and pay the auctioneer the deposit. This is usually 10% of the purchase price. If you do not have a cheque account, then talk to the agent prior to the Auction to determine in which other way the deposit can be paid. Should the highest bid be below the reserve price the property will be passed in. The person making the highest bid will normally have the first opportunity to negotiate for the property. Any other bidders may also be given the opportunity to purchase.

Bear in mind when attending an auction that your bid may not be successful. However you may still incur some cost, inspection and valuation fees, and possibly fees from your lending body. Like all services, some of these fees may be negotiable when you ultimately utilise these services.

To bid at an auction:

• Attract the auctioneer's attention by using a gesture such as raising your hand, calling out or nodding your head when you catch the auctioneer's eye.

• Don't hesitate to indicate your interest when the auction starts and the auctioneer calls for your bids. Your bid does not have to be the amount nominated by the auctioneer, although it is at the auctioneer's discretion as to whether or not to accept a bid.

• Don't leave your bidding until the last moment - you may just miss the property. Remember, subject to the reserve price, when the hammer falls the highest bidder is the purchaser.

• Remain calm and remember your finance limits at all times.

A sale by public auction is arguably one of the most exciting, effective and rewarding methods of buying and selling real property and seen by many as the ultimate indication of value of the actioned property on the day.

This document has been developed and produced as a community service with help from the REIA & REIQ and is offered as a guide only. Please use the information provided in this document as a prompt to further discuss the auction process with your preferred Real Estate agent.

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