There are a number of myths in the property market, the myth we’ll cover this week is: does a vendor have to sell to the highest bidder at an auction after the reserve is reached?
Generally speaking, a person cannot be compelled to sell their home, unless they agree. They alone make the decision to sell.
The way the law stands at present, a vendor’s agreement to sell their home must be set out in a contract they and the successful bidder sign and then exchange between them. Until that happens a vendor can change their mind and for any reason, and a successful bidder will have no legal recourse.
The vendor could change their mind for any reason; they may have decided that they don’t want to move after all, or they would like a longer settlement than that which was offered in the contract, or they are unable to agree on terms with the highest bidder.
So the answer is no, a vendor cannot be compelled to sell to the highest bidder after the reserve is reached
Fortunately, the likelihood of this technicality affecting the outcome of an auction is practically unheard of and in 99.99 per cent of auctions the fall of the hammer is followed by the signing and exchange of contracts. The REIV would like to see this legal technicality abolished so an enforceable contract is created on the fall of the hammer. This is the case in a number of other places and it would improve the auction process in Victoria if it were also the case here.
The laws in Victoria sensibly prevent an auctioneer taking any bids once the property has been knocked down to the highest bidder, but they do not compel a vendor to sell.
Last week’s myth was this question: does the vendor have to set a reserve? If you would like to read the REIV’s response to that, it’s still available at www.reiv.com.au.
