Auctioning a property
Before the auction
The vendor may set a reserve price as the minimum sale price for the property. They will need to put this in writing.
You must ask vendors if they have set a reserve price. If they elect not to set one, you must advise them in writing that they will be obliged to accept the highest bid.
A penalty of $28,750.00 applies if you don’t do this.
Comparative market analysis (CMA)
You may choose to recommend a reserve price to the vendor only if, before the vendor decides the price, you give the seller a copy of a comparative market analysis (CMA) for the offered property. If a CMA cannot be prepared for the offered property, you must provide a written explanation showing how you decided the market value of the property.
A CMA compares at least 3 properties that:
- are of similar standard or condition
- sold within 5km of the property
- sold in the last 6 months.
If you cannot find 3 properties that fit these criteria, you will need to:
- give your market advice in writing
- justify how you reached your opinion.
Price guides for buyers
The value of a property at auction is determined by the market. This can only happen at the auction itself.
Offering a price guide to buyers can:
- influence (intentionally or not) the eventual sale price of the property
- be misleading to consumers if the final price is significantly higher.
If a price guide is incorrect this may result in a misleading representation.
You must not misrepresent the property in any disclosures. This includes misrepresenting any factors that may impact upon the final sale price.
For these reasons, you must not publish any price guides for potential bidders.
However, you may give a price (or price range) to an electronic listings provider in order to sort the property into a search category on their website. They may not disclose the price on their website. Instead, they will need to include the following statement:
This property is being sold by auction or without a price and therefore a price guide cannot be provided. The website may have filtered the property into a price bracket for website functionality purposes.
You may only give a price to the listings provider if you are satisfied that they will follow these requirements.
You may also give copies of the CMA to potential bidders, but only if the vendor agrees in writing.
At the auction
You must keep a register of all bidders at an auction.
This means you will need to:
- register them before the auction starts
- see suitable identification (such as a driver's licence) before you allow a bidder to register
- give each bidder an identifying marker (such as a numbered card or baton) that they must use to indicate a bid
- announce at the start of the auction that only registered bidders may bid.
You must not identify any bidder during the auction. After the auction, you may only do so in order to help finalise the property sale. You must not identify a bidder in any other circumstances, except to an inspector or a court.
You must display your name at the site of an auction.
- use clear and legible text
- be in a conspicuous position in the premises.
A conspicuous position might be:
- by the entrance to the premises
- at an obvious position at the location of the auction.
Some limited exemptions apply—for instance, if:
- you are moving around a large, open outdoor area
- inclement weather would make it impossible to use the sign.
For example, this might be an outdoor auction in very strong wind.
In these cases, you must announce your name at the start of an auction.
Conditions of sale
You will also need to disclose the conditions of sale. These might include:
- the required deposit
- inspection details
- any other relevant details about the sale or the property.
You may choose to use the unsigned sale contract to disclose the conditions of sale.
Value of the property
You must not disclose either:
- the reserve price (though you can disclose that one exists)
- an estimated value of the property.
However, you may give copies of the CMA to bidders, but only if the vendor agrees in writing.
You may accept a bid from the vendor, but only up to the reserve price.
You must disclose whenever a bid is a vendor bid.
On the market
Once the bidding reaches or exceeds the reserve price:
- the property becomes ‘on the market’
- you may no longer accept vendor bids
- the vendor must accept the highest bid as the sale price.
If the vendor does not set a reserve, the property is on the market from the first bid.