Who can conduct an auction?
PROPERTY and businesses can only be auctioned for a fee by: an estate agent, an agent’s representative or an accredited auctioneer.
Accredited auctioneer describes a small number of people approved by the Business Licensing Authority on the basis that they held an auctioneer’s licence between February 1994 and February 1995.
An owner or part-owner can auction their own property.
A publicly advertised auction must be conducted according to the requirements of the Sale of Land Act 1962 and the Sale of Land (Public Auctions) Regulations 2014.
An auctioneer must display information and make announcements before an auction starts, make announcements and control the bidding during an auction.
An auctioneer may make bids on behalf of a seller to advance the bidding, accept bids from co-owners or their representatives who are genuinely bidding.
It is an offence for an auctioneer to knowingly accept a bid by, or for, a seller, other than a co-owner, make or accept fictitious (dummy) bids and accept late bids after a property has been knocked down to the successful bidder.
For at least 30 minutes before the auction starts, at the auction site, an auctioneer must display the rules that apply to the auction, the prescribed information statement and any other conditions, such as those that may be in the contract of sale.
There are five sets of auction rules in the Schedules to the Sale of Land (Public Auctions) Regulations 2014. Those that apply to a particular auction depend upon whether there will be vendor or co-owner bids. The auctioneer must select and display the appropriate rules.
The information statement is in the Schedules to the Sale of Land Regulations. It sets out the laws applying to auctions in Victoria.
Before the bidding starts, an auctioneer must make certain announcements. Some are general and apply to all public auctions; others are specific to the particular auction.
Auction will be conducted according to the rules and any additional conditions displayed before the auction starts. Auction rules prohibit late bids. Bidders will be identified on request.
Law prohibits and imposes fines for false bids, major disruptions by bidders, bidders attempting to prevent others from bidding.
Depending on the auction and rules displayed, the auctioneer may announce that the law prohibits the making of vendor bids other than by the auctioneer, auction rules do not permit vendor bids,the law allows co-owners to bid, and how many co-owners will be bidding.
The circumstances when co-owners may bid to buy a property are set out in the Sale of Land (Public Auctions) Regulations 2014.
Controlling the auction
The rules give an auctioneer authority to control an auction.
At any time during the auction, an auctioneer may set the amount for bidding refuse a bid refer a bid to the seller. Withdraw the property from sale. Re-submit the property for sale at the last undisputed bid or start the bidding again.
An auctioneer must not accept a late bid (those made after a property has been knocked down to the successful bidder).
An estate agent or agent’s representative who hears a late bid must not refer the bid to the auctioneer, seller or anyone else.
If a contract is not entered into after an auction and the seller wishes to offer the property for private sale, late bids can be referred to the seller. An agent must pass on all offers, unless instructed not to do so by the seller.
If a property is passed in at auction below the reserve price, the auctioneer can decide whether to accept any late bids, subject to first negotiating with the highest bidder.
Passing in a property
If the property is passed in below the seller’s reserve price, the auctioneer must invite the highest bidder to negotiate with the seller before offering the property to another bidder.
This also applies if the property is passed in on a vendor’s bid – this is a bid made to advance the bidding price, rather than to purchase a property.
After an auction
If a property is passed in on a vendor bid, the fact that it was a vendor bid must be stated: in any advertising or marketing by the agent that states the amount of the last bid by any publisher printing the amount of the last bid.