Real Estate Auctions – Tricks & Strategies
This post sponsored by Lawyers Conveyancing
There is something wrong with auctions. Informed consumers hate them, industry commentators condemn them, and governments have failed to legitimise them. The following hyperlinks will help consumers to understand what is wrong with auctions, and what steps they can take to protect themselves in auction situations.
The auction process in Victoria is a farce. Recent legislation passed by the State Government has failed to protect consumers, and will succeed only in making auctions appear more legitimate by introducing superfluous bidding rules.
The following material will inform consumers and estate agents as to the true status of auctions, the reason they are regarded as a nonsense, and why they will have no future when consumers become aware of their flaws.
First trick – the bidding conditions
Every lawyer involved in the preparation of Contracts of Sale of Real Estate will be familiar with the estate agent’s demand that “bidding conditions” should appear in the contract. Indeed, nearly every contract displayed at an auction will contain bidding conditions.
Usually, the the bidding conditions will include the following:
- No bid shall be retracted.
- No bid shall be less than the amount called for by the auctioneer.
- The highest bidder shall be the Purchaser.
- Highest bidder must sign within 10 minutes of the fall of the hammer.
- The Vendor is entitled to make dummy bids.
The estate agent points to the contract, and tells bidders that the auction will be conducted in accordance with the bidding conditions contained in the contract.
But why are the bidding conditions in the contract at all? The contract doesn’t bind anyone until it is signed; when the contract is signed, the auction has already finished!
There is only one reason for the bidding conditions being inserted into the contract, and that is to trick bidders into believing that they must be obeyed. We are critical of lawyers who allow themselves to be manipulated by estate agents who demand that bidding conditions be improperly included in sale contracts.
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See also: auctions | buying | selling | Section 32 vendor Statements | auction strategies | conveyancer