In recent years, auctions have become an increasingly popular way to sell or buy residential property. But before you decide to go down that path, do your homework and familiarise yourself with the process and what it involves.

The right agent

A key to successfully selling your home at auction is choosing the right agent - one with a proven track record in auctions and a sound knowledge of the geographical area in which you live. Before making your choice, we suggest you talk to three agents and:

• make sure they have a valid licence
• get a list of all their fees
• find out if they have a good knowledge of your area
• ask if they adhere to a code of ethics
• get quotes from them regarding their commission, fees and charges
• ask them what their fees, charges and services cover - these usually cover the time they spend promoting and selling your home, advertising and promotion costs and administrative costs
• ask them how they plan to promote your home - newspaper advertisements, letterbox drops, open houses etc.

The law says that there must be a written contract between between the seller and the agent, called an agency agreement. For more information, go to our agency agreements page.

Speak to your agent about choosing an auctioneer.

The contract of sale

A residential property cannot be advertised for sale until a Contract of Sale has been prepared. The contract must contain a copy of the title documents, drainage diagram and the Zoning Certificate (s 149) issued by the local council. Property exclusions must also be included and a statement of the buyer's cooling off rights must be attached. The draft contract must be available for inspection at the agent's office. It is important that you consult your solicitor or conveyancer about preparing the contract to make sure that everything is in order.

Setting a reserve price

The reserve price is the lowest amount you are willing to accept for your property. Before bidding begins, advise your agent what you nominate as the reserve price. This is usually not told to the prospective buyers.

If the highest bid is below the reserve price, the property will be 'passed in'. You will then either try and negotiate a price with interested bidders or put the property back on the market.

If the bidding continues beyong the reserve price, the property is sold at the fall of the auctioneer's hammer.

Successful bids

The successful bidder must sign the sale contract and pay you a deposit on the spot (usually 10%). There is no cooling-off period for anyone who buys a property at auction. If the property is passed in at auction but contracts are exchanged on that same day, the cooling-off period still does not apply.

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