Buying Property At Auction In Queensland

Planning to buy a property at auction in Queensland?

It’s normal to feel overwhelmed, especially if it’s your first time. Auctions are a serious business, with the property sold to the successful bidder on the fall of the hammer, providing the vendor’s reserve price has been met.

It is crucial that Buyers are well prepared for the day, including having researched the property, organised finance if required, and have a good understanding of the auction rules before participating.

What Is An Auction?

In the context of a real property or real estate auction, an auction is a public sale of real estate where prospective Buyers place competitive bids, with the highest bidder successfully purchasing the property.

Property auctions may be conducted in person or online, by a real estate agent who has a special license that allows them to act as auctioneer.

What Is The Auction Process?

The auction process is tightly regulated to ensure it is fair for all parties involved.

Prospective Buyers must provide their names, addresses and proof of identity in order to register to bid. Only registered bidders are eligible to take part in the bidding process on auction day.

The property is sold at the fall of the hammer, and the successful bidder must sign the contract immediately.

What Is The Reserve Price?

The reserve price is the lowest price the Seller is willing to accept for the property at the auction. This amount is recorded in writing before the auction. The Seller does not have to set a reserve price if they do not want to.

The auctioneer agent is allowed to tell potential Buyers at the auction whether or not there has been a reserve price set, but not what the reserve price is.

The property won’t be sold at the auction if no bids are made at the reserve price or over it.

What Are Vendor Bids?

The Vendor is allowed to bid on their own property until the vendor’s reserve price is reached. It is illegal for the vendor to bid any higher than their reserve price. The auctioneer must disclose if a bid is a vendor bid.

What are ‘Dummy Bids?’

A dummy bid is where either the vendor bids, or has their family, friends, the auctioneer or any other person make ‘fake’ bids in order to increase the purchase price. Dummy bidding is illegal in Queensland.

Can I Make An Offer Before The Auction?

The Vendor may be willing to take offers prior to the auction date. If you are interested in the property, you should talk to the real estate agent.

Important Things To Know When Attending Queensland Auctions

Property auctions can provide a quick and transparent way to sell real estate, and they often attract investors, home buyers, and developers seeking opportunities. However, Buyers should thoroughly research the property, understand the auction rules, and be prepared for a competitive bidding environment.

Some important things to note are;

Research the Value of the Property

Before attending an auction, Buyers should research the value of the property by looking at suburb data and recent sales of similar properties in the area.

No Cooling Off Period

No cooling off period applies to properties bought at auction in Queensland. That means you will not be able to change your mind and cancel the contract in the usual five business day window.

The cooling off period also doesn’t apply to contracts made within two business days of an auction where the Buyer was one of the registered bidders at the auction.

It is against the law in Queensland for the selling agent to give you a price guide for an auction property

Set a Budget and Secure Finance

It is important that you have finance secured if you need to borrow money for the purchase. This is because properties sold at auction are sold unconditionally, so if the Buyer is not able to complete the purchase – that is, have the balance of the purchase price (less any deposit) and any other funds required to complete the sale available – on settlement day, they will be in breach of the contract of sale, and risk losing their deposit and a claim for damages.

Buyers should set a budget ahead of time and stick to it during the auction. This is because once the hammer falls, the highest bidder is obligated to complete the purchase. Potential Buyers should also be wary of over-bidding, and note that lenders are not likely to agree to lend amounts over the valuation of the property.

Other Costs to Consider When Buying At Auction

It is critically important to make and stick to an auction budget that takes account of the often overlooked costs associated with buying a property and allows the Buyer to have a decent buffer in the event of unforeseen costs.

The costs you should account for include;

Finance

As we’ve covered above, Buyers should have pre approved finance in place prior to registering to bid.

Deposit

The deposit amount will be set prior to the auction. Buyers should make themselves aware of the deposit amount, and be prepared to transfer those funds within the timeframe set out in the contract of sale.

Stamp duty

Stamp duty (or transfer duty) is a tax on the transfer of property, and varies depending on the dutiable value of the property and whether any concessions apply.

Stamp duty is usually payable at settlement.

Titles Registration Fee

This is dependent on the purchase price of the property, and can be estimated using Titles Queensland’s fee calculator.

Building and Pest Reports

Because houses sold at auction are sold unconditionally, it is highly advisable to obtain a building and pest report prior to the auction day, so you are aware of any defects in the property ahead of time.

Searches

It is important to conduct searches on the property, such as a title search, a land tax clearance search, and any other searches relevant to the property you will be bidding for.

Insurance

In Queensland, the property is at the Buyer’s risk from the first business day after the contract is signed. It is important that you organise insurance as soon as the contract is signed.

More Questions?

Planning on buying property at auction and have more questions about the conveyancing process? Give one of our friendly, expert conveyancing solicitors a call today, or reach out to us via our contact form.

The above is not legal advice and is general information only