Real estate auctions
Properties are commonly sold and bought at real estate auctions in the Northern Territory (NT).
Before you buy or sell at an auction
Buyers or sellers should attend a few auctions so you can get familiar with the process.
If you're a buyer
You should read a typical contract of sale so you can understand what you will be asked to sign if you are the successful bidder at an auction.
Find out what you will also need to have arranged in advance such as finance and any inspection reports.
Go to open inspections so you can discuss the property with the agent showing you around.
Before the day of the auction you should:
- decide on the maximum amount you can spend, based on your finance
- check all legal documentation with a solicitor or licensed conveyancer
- organise a cheque to pay the deposit
- understand that the contract of sale is unconditional and that if successful at auction, you can't withdraw from the contract.
If you can't attend the auction you may need to organise a specialist or another trusted person to act as advisor and/or bid on your behalf at the auction.
If you're the seller
All real estate auctions in the NT must be carried out by a registered auctioneer.
You can talk to a real estate agent about arranging an marketing campaign to maximise interest in your property auction or you can do it yourself.
You can contact your nearest NT Licensing Office to find a registered auctioneer or your real estate agent can arrange this for you.
In the lead-up to the auction, the agent will gauge the level of interest from buyers, how many active bidders are likely to turn up and what the range of bids is likely to be on the day of the auction.
Auctioneers who are also members of the Real Estate Institute of the NT must follow a code of conduct to make sure the auction process is transparent and fair.
Go to the Real Estate Institute of the NT website to find out more.
Set your reserve price
You should set a reserve price for your property, which is the minimum amount you are prepared to sell your property for.
You can discuss the amount with your real estate agent and auctioneer who can offer advice on the current market prices and your location.
If you do not set a reserve price the property will sell to the highest bidder and you may not be happy with this price but you have to accept it.
Your reserve price is not given to any of the buyers before the auction. Only the agent, auctioneer and the property owner know this price.
The auctioneer will promote competitive bidding up to and beyond the reserve price.
You can consider offers made through an agent before the auction starts.
If you want to accept one of these offers, you will usually sign an unconditional contract.
This does not allow for a cooling-off period or for conditions for the buyer such as time to organise finance or inspections.
What happens on auction day
The property is usually open for final inspection before the auction. Buyers can have a final look at the property, inspect the associated paperwork and to ask the agent any questions.
A copy of the auction rules and any additional conditions should also be available for buyers to read.
During the auction
At the start of the auction the auctioneer will give details of the auction rules, any additional conditions that may apply if bidding by the seller will apply.
The auctioneer must encourage as many possible bidders to achieve the highest possible sale price for the seller.
The auctioneer may set the amount by which bids increase and these amounts may vary through the course of the auction.
The bidder will make a bid at the amount stated or offer an alternative amount. The auctioneer may accept or reject that bid.
Bidding by seller
The seller of the property can bid at the auction or have a person bid on their behalf.
This is commonly called a vendor bid.
The auctioneer must announce when this type of bid is being made by the seller during the auction.
Pause to get advice from seller
The auctioneer may announce that they need to talk with the seller to get advice or instructions during the auction.
Generally if the reserve price has been reached, or if the seller is prepared to sell at the bid offered, the agent will announced that the property is on the market or can now be sold.
If there is a successful bidder
After a final successful bid, the auctioneer will announce that the property is sold.
If you are the successful bidder you will have to sign the unconditional contract of sale and pay a deposit.
The contract of sale is unconditional and that there is no cooling-off period.
The sale is finalised at settlement when the title and transfer documents have been exchanged and the balance of the purchase price has been paid.
If the property is passed in
If the highest bid at the auction does not reach the reserve price set by the owner or seller, the property is passed in and has not been sold.
After the auction the highest bidder may have an opportunity to talk to the seller or the agent about increasing their offer to buy the home by private treaty.
Last updated: 16 December 2016
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