Every professional at a Melbourne auction works for the seller. This is precisely what happens when you have a Melbourne buyers agent working for you, and this is precisely why the different structure makes a difference. Enter a typical Melbourne auction on a Saturday and you will know from looking around just how the structure of the room works. The auctioneer is the representative of the seller, the selling agent is the representative of the seller, and even the solicitor for the seller preparing the disclosure documents at the registration desk is the representative of the seller. The buyers, on the other hand, have no representation at all.
Melbourne is one of the cities where auctions occur more regularly than anywhere else in Australia. Auctions are not periodic in Melbourne; auctions are simply assumed in Melbourne for many different property types and price ranges. This is important because of the legal structure of the auction in Victoria, which is that the contract of sale in Victoria is unconditional when the hammer falls as per the Estate Agents Act. There is no cooling-off period, there is no finance clause, and if there is anything that the buyer needs to do before the sale occurs then they will still have to do it.
Vendor Bidding and What It Means in Practice
The practice of vendor bidding, where the auctioneer places a bid on behalf of the vendor up until the reserve price is reached, is perfectly legal in Victoria, as long as the bids are openly made. Not all buyers pay attention to such bids when the momentum of the bidding process gets going during a competitive auction. If vendor bidding is mistakenly considered by buyers as a bid from another registered buyer, it results in a momentum of bidding that goes beyond the level of interest among buyers.
Access to Properties That Never Reach a Listing
Some properties sell prior to any public marketing campaign in Melbourne’s restricted inner and middle-ring suburbs. This happens off the market through professional networks created over the years through interaction between buyers’ agents and selling agents. As per ABS housing finance statistics, Victoria has the highest volume of new housing loans nationally. This indicates high activity from buyers vying for available properties in both public and off-market markets. Professional buyers have access to this off-market supply; those who do not have professionals do not.
Due Diligence Within a Compressed Timeline
A typical Melbourne auction campaign takes three to four weeks. During this time, buyers will have to examine the Section 32 vendor statement, organise an independent building and pest inspection, conduct title and planning investigations, and undertake comparable sales analyses to determine the actual value of the property. The Section 32 vendor statement is a statutory document that is prepared by the vendor’s legal counsel. It contains critical information, but it is not a replacement for an independent investigation. Undertaking all these activities amid the other commitments in a normal working day and running multiple campaigns at the same time becomes very challenging.
What a Structured Engagement Provides?
A Melbourne buyers’ agent starts with a comprehensive brief, which includes suburb choice, property type, budget, timeframe and criteria for a successful outcome. The buyer’s agent searches for properties both on the public market and off-market, undertakes inspections, lists properties according to the criteria agreed on, conducts due diligence and negotiations up to the point of contracting.
Under Victoria legislation, buyer’s agents must be registered with Consumer Affairs Victoria as an active real estate agent. This creates legal responsibility towards the buyer as the agent’s client. Vendor representation is inherent in every Melbourne transaction. Having structured representation in the buyers’ camp is just part of participating in such a market.
