elleneo Posted August 25, 2015 Report Share Posted August 25, 2015 Please share any tips and general knowledge wrt buying a property on Auction in Australia... Quote Link to comment Share on other sites More sharing options...
HansaPlease Posted August 25, 2015 Report Share Posted August 25, 2015 If the auction has started and the bidding is slow, and nobody has raised their hand yet. Chances are, the agent could put in a Vendor Bid* in an attempt to get things moving. Quite often this Vendor Bid would be way above the bottom range of the advertised price, or even at the top end. If this happens, it's perfectly acceptable to shout "Well then tell the bloody Vendor to buy the house himself if he's so keen to bid on it..." at the top of your voice. *the single most ridiculous concept in Real Estate. Quote Link to comment Share on other sites More sharing options...
RedPanda Posted August 25, 2015 Report Share Posted August 25, 2015 What!? Really? No...I'll have to look this up, it seems a bit like drop bears and hoop snakes to me. (there doesn't seem to be a sceptical face) Quote Link to comment Share on other sites More sharing options...
RedPanda Posted August 25, 2015 Report Share Posted August 25, 2015 (edited) I just found this on a legal page:Handling the “vendor bid”The new legislation introduced by the State Government prohibits “dummy bidding”, but allows “Permissible vendor bids”.Consumers should understand that an auction can be crippled if “Permissible vendor bids” are used by the auctioneer. (We suspect that the use of vendor bids by auctioneers may become grounds for an action in gross negligence in future).A vendor bid could be described as a counter-offer made by the vendor. When a person makes a bid at an auction she is really saying, “My offer to buy is $290,000″. When the vendor offers a vendor bid, he is effectively saying, “My offer to sell is $300,000″. All the bidder has to do to buy the property is to call out “Done!” The bidding stops, because the vendor’s bid, or counter-offer has been accepted.Estate agents expect that bidders will allow the vendor to pretend that he is one of them, and that they will bid against him as though he really wants to buy his own house. Clever bidders will remain silent as soon as they hear the agent declare the vendor’s bid. It is at this point that the estate agent should be called upon to to declare the reserve price, and to stop the nonsense.It seems that you can stop the bidding after a vendor bid...makes sense. These Aussies are crazy! (but not crazier than other people) Edited August 25, 2015 by RedPanda Quote Link to comment Share on other sites More sharing options...
HansaPlease Posted August 25, 2015 Report Share Posted August 25, 2015 Yup, although my post above is tongue in cheek - I still believe that the vendor bid is stupid.It's even more stupid when the vendor (agent) puts in a bid that's way above the advertised price when nobody else has bid. Often results in an embarrassing situation where the VendorBid is the only bid, the house doesn't sell, and everybody goes home thinking: "what just happened there?" 2 Quote Link to comment Share on other sites More sharing options...
Donovan83 Posted August 25, 2015 Report Share Posted August 25, 2015 Many, MANY things to do with real estate here are stupid. Real estate agents the world over are generally sharks, but they are a special breed of sharks down here. The practice of gazumping an auction is also permitted in Aus - https://en.wikipedia.org/wiki/Gazumping . Quote Link to comment Share on other sites More sharing options...
RedPanda Posted August 25, 2015 Report Share Posted August 25, 2015 The same page that I got that snippet from also said the whole thing is a legal farce, because Victoria does not acknowledge an non-written contract. So basically, your bid is not legally binding, only once you sign the contract are you legally bound. Quote Link to comment Share on other sites More sharing options...
Sunnyskies Posted August 26, 2015 Report Share Posted August 26, 2015 There are some general rules about bidding at auction and we have worked out that they are not the same across each state, so make sure you ask the agent for the rules relevant to the state you are in.General rules that we have followed:1. don't believe the stated price in Melbourne and Sydney - in Melbourne the stated price is generally 25% less than what the property will sell for. The agents are obliged if they are giving a price guide to be within 10% of the anticipated price, but as the anticipated price has a wide range, it is possible for the anticipated price to be a lot lower than the reserve. ie the price guide is $800K to $1m. You get yourself ready for an auction in that range, but then the house sells for $1.25m and you are trying to work out what happened. In Brisbane this is different - you generally don't get a guide and have to push the agents for some idea of what an equivalent house would cost. Pricing is a bit more certain in Brisbane, so generally the price you see is the price you pay (or at least somewhere close to that - it could even be less).2. research, research, research - work out what houses in the area you are looking at have sold for. If you are looking in Sydney or Melbourne try and factor in an increase in pricing, so that you are not surprised when the process takes off and the price exceeds the price guide.3. speak to your bank - know what your credit limit is and get pre-approval. Remember that you have to hand over a cheque for 10% of the purchase price when you sign the contract after the hammer falls. If you cannot get financing after that your deposit can be retained as liquidated damages (ie an genuine pre-estimate of loss suffered). 4. know your limit - irrespective of what the bank will lend you, make a positive assessment of what you believe the house is worth, bid up to that level and no more. If you keep on loosing out either your limit is too low or the houses you are looking at are out of your price bracket and you need to look at cheaper houses.5. on auction day - don't be the first bidder, get a sense of who is bidding and how the auction is going. We have bid at a number of auctions and been successful twice. At the first we used an agent to help us as we had had no success when bidding on our own. The plan was to let the other bidders fight it out until the agent went back inside to get instructions. Once the auctioneer returned and the first bidder backed out then to come out fighting and fight each bid with an immediate up bid until we get to our limit. We had five bidders in total bidding against us. We were eventually fighting with $1000 increases and eventually the other bidders gave up. We bought just under our limit. On the second we bid ourselves as we were then more comfortable with the process. I let the two other bidders fight it out until one started flagging, then I put my first bid in. I was up against the 2nd bidder for a few more bids and then the auctioneer went inside and got instructions. I then had an informal negotiation with the auctioneer as he didn't pass the property in. We gave our final price and said we were ready to walk, the 2nd bidder wasn't prepared to up our offer. The auctioneer and agent had a long negotiation with the purchaser and finally they returned and we confirmed our bid and the property was sold. In both auctions I was very comfortable with the price we set as our limit, and in both instances we had no issue with bank funding. Quote Link to comment Share on other sites More sharing options...
Donovan83 Posted August 26, 2015 Report Share Posted August 26, 2015 (edited) -- Edited August 26, 2015 by Donovan83 Quote Link to comment Share on other sites More sharing options...
elleneo Posted August 26, 2015 Author Report Share Posted August 26, 2015 Very interesting..What does a buyers agent cost? Quote Link to comment Share on other sites More sharing options...
Sunnyskies Posted August 26, 2015 Report Share Posted August 26, 2015 Depends on the buyers agent and the price of the house you are looking to buy. The buyers agent did a lot of the leg work working out the true price of the house, what the inside track with the agent was (each agent has their own way of doing things and the buyers agent generally knows the modus operandi of each), doing searches on each house for heritage, overlays, easements, other things we should be aware of. Bit of a shoulder to cry on! They also helped get us to understand what we could afford to buy so that we stopped looking at houses out of our price range.Before we started the process I started going to open days, picking a property I thought we might buy and then tracking it through to auction. It took me a while to work out the tricks. We were really naive the first time we tried to bid, thought we were in with a shot and the first bid was our max price! Second time I also thought we were in with a shot but the propert went for $100k more than our max! Third time we were closer still. If I had had the patience we probably could have done it on our own, but I was worried that if the market carried on moving I would have to move another suburb out (we had already had to move over a suburb or two to be in the right price range).I don't know who the buyer advocates are in Sydney, but check them out carefully before committing. I am aware of some in Melbourne who basically try and just up your purchase price limit, rather than helping you find something that suits your pocket. Quote Link to comment Share on other sites More sharing options...
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