There are certain rules that you will be expected to follow when you buy a property at auction. Failure to comply with auction rules and terms could be considered a breach of contract, and there may even be legal consequences if you fail to follow the rules. Get to know what is expected of you before you attend the auction to avoid any problems.
Legally binding auction rules
The rules of auctions that are legally binding can vary from one state to the next, but here are some general laws that relate to most property auctions.
- Sellers are usually able to make one bid on the property. The auctioneer will announce this bid as a vendor bid. Some states allow sellers to make more than one bid.
- Auctioneers will announce the bidder when requested to do so.
- People who have not bid on the property are not allowed to say that they have placed a bid.
- Bidders are not allowed to disrupt the auction while it is in process.
Auction rules that are legally binding must be followed. When attending an auction you are expected to be familiar with these laws and there are penalties for failing to comply with property auction rules.
There are some terms of bidding at auction that are not formally written out. However, these implied regulations are followed by people who are experienced in bidding on properties at auction. Getting to know these rules will help you establish yourself in the property auction community.
- Read through contracts on your own instead of believing what others tell you about these terms. Auctions can be very competitive, so you shouldn't expect your bidding competitors to let you know about how the process is going to work.
- Agents are notorious for undershooting the start price that they give you before the auction begins. If your budget is close to the quoted start price, you may be out of luck.
- Rely on your solicitor to advise you about the legal implications of bidding on a property at auction.
- Your highest potential bid should remain a secret until it comes time to make this bid. Revealing this information beforehand gives competitors an edge as they will know your maximum bidding level.
The number of rules and terms that you have to follow when you are going through the auction process may seem daunting, but you'll become more familiar with how auctions work as you attend the events. If you are thinking about bidding on a property, you can alleviate some of the anxiety that comes with the overwhelming nature of the auction process by attending auction events before the one that you're interested in. This gives you a chance to familiarise yourself with the rules before you risk your own personal finances on a property purchase.