How do auctions really work? What you need to consider if you’re bidding in Victoria.
By | 15th Jan 19

Everyone has an opinion when it comes to auctions, but how do they really work?

Everyone has an opinion when it comes to auctions, but how do they really work? The auction clearance rates have been slowing down in Melbourne, so it’s a good idea you really understand how an auction works beyond strategy and bidding.

 

If you have attended auctions in the past, you may be aware of certain phrases being “called” by the auctioneer. An auctioneer begins the auction by giving a run-down of the property including property details, address, terms and contract details. The auction opens with a starting bid, but if this is below the reserve price, the auctioneer will keep asking for more bids until the price hits the reserve.

Once this is achieved the property is called “on the market”. This means that the property has hit the minimum reserve price and the highest bid will therefore win the auction. Depending on the bidding situation, the auctioneer may hold the crowd to get a confirmation from the vendor that the property is officially on the market.

What is a vendor bid? This is when the vendor places a bid to progress the auction further. In Victoria there are no limits as to how many times a vendor can bid but the auctioneer has to bid on their behalf.

What if the property doesn’t reach the reserve? In this instance the property is usually passed in. This ends the auction and in Victoria, the last bidder has the first opportunity to negotiate with the vendor after the auction has ended. Failing this, the vendor may negotiate with other parties or list the property on the market as a private sale.

It’s also important to know that should register yourself with the agent to bid prior to auction. 

Let us help you! Make an obligation free appointment with one of our Buyer’s Agents today by calling: 1300 239 901