Auctions are the most transparent way of buying real estate, yet there remains plenty of myths about them. 

From believing that the agent is in competition with you or you can’t buy your first property at auction, there are myriad misconceptions about auctions. 

Here are five of the most common.  

1.    The auctioneer and agent are against you 

Most bidders believe they have to work against the agent and auctioneer to be the successful buyer. 

They falsely think they are the competition that they have to beat on the day to secure the property. 

However, the competition is actually the other buyers. 

The agent and auctioneer want the same thing as the buyer, which is someone to buy the property. 

2.    Vendor bids are dodgy 

Let me be clear about this, a vendor bid is not a dummy bid. 

What it is is a clear indication from the seller than they will not sell you the property at the level of the vendor bid. 

On the other hand, a dummy bid is illegal in every State and Territory because it is a fake bid from someone masquerading as a buyer. 

A vendor bid is clearly disclosed as such, whereas dummy bids are designed to create confusion. 

On top of being illegal, dummy bids are also archaic, outdated and should never be used by anyone.  

3.    It must be a 10 per cent deposit and a 30-day settlement 

Most sellers are comfortable with five per cent as a deposit and, sometimes, will even offer flexibility around that if it encourages other parties to bid. 

The same goes with settlement periods. 

That’s because the cash unconditional nature of auction contracts provides more protection, which allows vendors to be more liberal with the deposit amounts and settlement periods. 

The key is communication with the agent and seller prior to the auction so you can have your own individual terms approved beforehand. 

4.    First home buyers can’t buy at auction 

To buy a property at some point you will have to go unconditional – either at auction or via private treaty. 

What I mean is you can’t buy a property conditionally. 

All an auction does is try to bring that day forward. 

Fundamentally it’s just expediting that unconditional process. 

All it means is that first home buyers must be organised earlier, including loan pre-approval preferably, prior to the auction. 

5.    Not bidding is a strategy 

Let’s consider this scenario, which unfortunately I see time and time again. 

You have a buyer who has gone through the property four times, they have talked about it over the kitchen table for the past two weeks, they’ve brought every living relative through it, and they’ve done a valuation and a building and pest report. 

And, yet, they then believe that their best chance of buying it is to stand there on auction day with their hands stubbornly by their sides. 

The truth of the matter is that inactivity is not a strategy, it is a hope. 

The reality is that you physically can’t buy a property without doing something. 

Even if the property gets passed in, you have then just opened the door to all other buyers who you will have to compete with. 

Either way, non-bidding as a strategy that is fraught with danger and generally it’s poor advice, or fear, that leads someone to employ it. 

At the end of day, it’s a moment of courage that will enable you to buy a property – either at auction or private treaty.