How auctions work

The auction process step by step

A property auction is conducted by an appropriately licensed auctioneer. Registered bidders compete under the announced auction conditions and the terms of the proposed contract.

The legal effect of the auction, deposit requirements, settlement date and any other obligations should be understood before bidding.

Before the auction

Request the proposed contract, auction conditions and seller disclosure documents early enough for your Queensland solicitor to review them before the auction.

Confirm the investigations relevant to the property and your intended use. These may include building and pest, title, planning, flood, body corporate, insurance and finance enquiries.

If changes to the proposed contract are required, ask your solicitor to raise them before the auction. Any variation depends on the seller agreeing and properly documenting it before bidding begins.

Queensland's statutory Seller Disclosure Scheme generally applies to sales of freehold land, including sales by auction, subject to limited exceptions.

The seller must provide the required disclosure documents in accordance with the legislation. These documents contain important information but do not cover every matter a buyer may need to investigate.

Have your Queensland solicitor review the disclosure documents and explain whether further enquiries are required. See the Queensland Seller Disclosure Scheme.

On auction day

Prospective bidders must register and provide the information and identification required by the auctioneer.

The auctioneer conducts the bidding under the announced conditions. If the property is sold, the contract is formed when the auctioneer announces completion of the sale, whether by the fall of the hammer or another customary method.

If the property is not sold during the auction, it may be passed in and the seller may choose to negotiate afterward.

Bidder registration

Before bidding, confirm that the bidder registration and proposed buyer details are correct.

If bidding for another person, company, trust or other entity, arrange the required authority and confirm the purchaser details with the selling agent and your solicitor before the auction.

Do not wait until after bidding to resolve who will be named as the buyer.

After the property is sold

The successful bidder will generally be asked to sign the written contract and pay the deposit in accordance with the contract terms.

The contract has already been formed when the auctioneer announces completion of the sale. The later signature records the agreement.

A buyer cannot unilaterally add a finance condition, building and pest condition or other term after the sale has been completed.

Check the auction contract for the deposit amount, due date and accepted payment method. Arrange access to the required funds before bidding and confirm the payment process with the selling agent.

An auction contract is generally not conditional on finance unless different terms were agreed beforehand.

If the buyer cannot settle, the seller may have contractual rights that can include terminating the contract, forfeiting the deposit, reselling the property and claiming loss or damages.

The available rights and consequences depend on the contract and circumstances. Obtain legal advice immediately if a settlement problem arises.

If the property is passed in

If the property is passed in, the seller may choose whether and with whom to negotiate. The highest bidder does not have an automatic legal right to an exclusive negotiation period.

For a residential property, the statutory cooling off period also generally does not apply where a registered bidder enters into the contract by 5 pm on the second clear business day after the property was passed in.

Have your solicitor confirm the contract position before signing.

Seller bids

If the seller or seller's agent bids during the auction, the auctioneer must announce that the bid is made by the seller or seller's agent.

Where a reserve price has been set, the auctioneer must not accept a seller bid above the reserve.

Preparing to bid

Due diligence before bidding

Because an auction purchase is generally unconditional, buyers should address the legal, financial and property enquiries relevant to their circumstances before bidding.

The exact enquiries depend on the property, proposed contract and intended use.

Finance preparation

Speak with your lender or finance adviser before bidding and understand the limits of any preliminary or conditional approval.

A preliminary finance approval does not guarantee final approval for the property or purchase price. The lender may still require a valuation, updated financial information or other conditions to be satisfied.

Set a bidding limit that accounts for your available funds, likely borrowing capacity, deposit, purchasing costs and the possibility that a lender's valuation may be lower than the auction price.

Building and pest inspection

Consider arranging a building and pest inspection before the auction and review the written reports and their limitations.

If an inspection identifies concerns, obtain any recommended specialist advice early enough to consider it before bidding.

A later discovery does not automatically create a right to end an auction contract. Ask your solicitor about the contract and any legal rights relevant to the circumstances.

Legal review of the contract

Have a Queensland solicitor review the proposed contract, auction conditions and seller disclosure documents before bidding.

Ask about the settlement date, deposit, inclusions, exclusions, special conditions and anything else that may affect your obligations.

Any requested changes should be raised and agreed before the auction.

Title and planning searches

A title search may identify registered ownership, easements, covenants, mortgages and other registered interests.

Planning enquiries are separate. Depending on the property and intended use, they may include zoning, overlays, approvals, lawful use and other council or state requirements.

Ask your solicitor and any relevant planning professional which enquiries should be completed before bidding.

Set a bidding limit before the auction using your finance position, assessment of the property, purchasing costs and personal circumstances.

A written limit can help provide a clear reference during competitive bidding.

A buyer's advocate may be engaged to bid under an agreed strategy and limit. Confirm the scope of the service, fee and bidding authority before the auction.

Local context

Auctions in the Noosa region

Auction is one of several sale methods used across the Noosa region. The level of interest, auction conditions and likely outcome vary by property and campaign.

Buyers should prepare for the specific property rather than relying on assumptions about the suburb, price range, reserve or number of competing bidders.

If a property is passed in, any later negotiation is separate from the auction result and should be approached with the same attention to contract terms, cooling off rules and legal advice.

An expression of interest campaign is not an auction.

The process, contract conditions and legal effect depend on the campaign documents and the contract ultimately proposed.

Do not assume that an expression of interest process removes finance conditions or statutory cooling off rights. Have your Queensland solicitor review the proposed contract before signing.