Selling by auction

An auction is a public sale that happens at a specific date, time and place.

Prospective buyers bid for your home. The highest bidder enters into a contract to buy your home at their offered price. They must sign a contract immediately.

There are serious penalties if they cannot finalise the sale on time.

Before the auction

Reserve price

You can set a minimum sale price for your home. This is the reserve price. You must put this in writing.

Your agent will ask you to set a reserve price. You don’t have to do this, but not having a reserve price is very risky. If you don’t set a reserve price, you must accept the highest bid (even if it’s well below your expectations).

Your agent must warn you if you don’t want to set a reserve price.

Comparative market analysis (CMA)

If you want your agent to advise you on your reserve price, they must give you a comparative market analysis (CMA).

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 they cannot find 3 properties that fit these criteria, they will need to:

• give you their market advice in writing
• justify how they reached this opinion.

They may give copies of the CMA to the bidders, but only if you agree in writing.

At the auction

Disclosures to bidders

The auctioneer will need to disclose your conditions of sale.

Conditions of sale might include:

• your required deposit
• inspection details
• any other relevant details.

They might choose to use the unsigned sale contract to disclose the conditions of sale.

The auctioneer must not:

• indicate whether you’ve set a reserve price
• tell bidders the reserve price.

Vendor bids

In Queensland, you can bid on your own property, but only up to the reserve price.

Before the bid reaches the reserve price, the auctioneer can:

• accept bids from you to raise the price
• accept bids from your representative
• can bid on your behalf.

The auctioneer must announce if a bid is a vendor bid.

If a vendor bid is announced, bidders will know that a reserve price has been set, and that it has not yet been reached.

Once bidding reaches the reserve price, any more vendor bids will become ‘false bids’.

False bids are illegal.

Dummy bids

A dummy bid is an attempt to raise the bidding, after the reserve price has been reached. These can be done by:

• you
• your family or friends
• the auctioneer
• any other ‘planted’ individual.

Dummy bids are illegal.

After the auction

If the bidding is past the reserve price, you must accept the highest bid as the sale price. You and the buyer will need to sign the sale contract right away.

You don’t need to accept the sale if the bidding didn’t reach your reserve price. You may choose to enter into negotiations with a bidder.