Make sure you understand the type of auction you are attending
We get the odd frustration from having an auction operate under a different formula from the standard schedule 1 auction (explained below).
A few weeks ago, we were bidding on behalf of a client for the property 74 Falconer Street North Fitzroy (pictured below). Half an hour before the auction, we were made aware that one of the owners of the property were intending to bid at their own auction. The sale situation was a deceased estate.
A number of siblings were the beneficiaries, and one sibling wanted to buy the property from the other siblings. They used an open market strategy, and we ended up being outbid by that sibling at the auction.
It was a disappointing situation. We felt that the entire campaign should have this mentioned in its marketing material rather than being made aware just 30 minutes prior to the auction.
As a guide to these confusing situations, we’ve included below the different types of auctions so buyers can be best informed about these and what they mean.
By law, the estate agent must display the auction rules 30 mins prior to auction. The auction can either be schedule 1, 2, 3, 4 or a schedule 1 with an alternative.
Here is the breakdown:
The most common auction in Victoria. A schedule 1 auction allows the agent to place a bid on behalf of the vendor, however no co-owner bidding to take place.
The alternative to schedule 1 is exactly the same listed above with no vendor bidding at all. This is the purest auction possible. However, most auctions will not use this.
Where two co-owners own the property, one co-owner may bid for the property, plus the auctioneer may also take a vendor bid on behalf of the owners.
The property has two owners or more, and some (but not all) co-owners may bid for the property. The auctioneer may also take vendor bids.
Two or more co-owners own the property. All co-owners may bid on the property, however vendor bids cannot be taken by the auctioneer.
This can be a marriage situation were both husband and wife are bidding for their own property together with the open market!
A good tip for property buyers is to always look at the rules of the auction before you intend to bid. Even take a photo with your smartphone to ensure that the auction you are bidding on is a pure auction. Owners bidding on their own property can distort the price paid to unrealistic levels, and you don’t want to be left buying a property at a figure that isn’t market driven.
Paul Osborne is the founder of Melbourne buyers' agency Secret Agent.
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