What do I need to know before buying goods at an auction?
Before you start bidding it’s a good idea to do some research:
- If you’ve never bought at an auction before, try going to one just to observe before you attend as a bidder.
- Inspect the goods before they go up for auction. The auction house may hold an inspection day, or produce a catalogue with the details of the goods being auctioned. You can also have a look at the goods on auction day, just before the auction starts.
- Read the terms of the auction. These should be on the auction house’s website. If you have to register before you can bid, the terms should be bidder’s agreement.
- Try to get an idea of how much the goods are worth, and decide how much you are willing to pay for them.
An auction sale is a contract. If your bid is the final bid and it is accepted by the auctioneer then you have entered into a legal agreement to buy the goods, even though there may be no written agreement yet.
An auction house must make the terms of sale clear to the bidders at the time of the sale or before the auction commences. Normally they will ask you to sign a bidders agreement before the auction. Terms can include that the goods must be collected on the same day, that payment must be in cash or by bank cheque, or that the buyer must pay a percentage of the sale price to the auction house (this is called a “buyers premium”).
Read on for more information about your rights when buying in an auction.
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What are my rights when buying goods through a registered auctioneer?
A registered auctioneer is someone who sells goods or services by auction on behalf of a seller and charges a commission or other payment for that service, and is registered under the Auctioneers Act 2013.
For auctions which take place via a registered auctioneer, your rights include:
- You can withdraw your bid before the end of the auction.
- The auctioneer must display a ‘notice of terms’ before the auction and for the duration of it, which tells you whether there is a reserve price, whether vendor bids are allowed and whether the vendor is a trader.
- Auctioneers must not mislead or deceive you about the service they offer or the products for sale.
- If the consumer goods you buy are sold on behalf of a trader, then you are covered by the Consumer Guarantees Act. If the goods you have bought turn out to be faulty or not as described, you can complain to the trader, whose contact details should be on the notice of terms or the auction sale and purchase agreement.
Be aware that if the vendor (on whose behalf the auction house is selling the goods) is not a trader, then this is effectively a private sale and you don’t have much protection if the goods turn out to be faulty.
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Are auctioneers allowed to make vendor bids?
A vendor bid is a bid that is made by the seller or someone acting on their behalf (e.g. an agent or auctioneer).
Vendor bids are allowed if:
- the notice of auction states that vendor bids are allowed
- a reserve price has been set
- the vendor bid is less than the reserve price
- the auctioneer clearly identifies each vendor bid when one is made during the auction
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What are my rights when buying goods in an online auction?
If the auction is run by an auctioneer, read What are my rights when buying goods through a registered auctioneer? to find out what your rights are.
Where an auctioneer is not involved (e.g. if you bid on something in a TradeMe auction), your rights are similar to those you'd have if you buy from a seller without using a bidding process:
- If you buy consumer goods and the seller is a trader, you are covered by the Consumer Guarantees Act.
- If the seller is not a trader then it's a private sale and you don't have as much protection. You can read about this on our Private sales page.
Consumer Protection (Ministry of Business, Innovation and Employment) also has information about your rights when you buy from a private seller in an online auction, or at an auction house.
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How can I tell if I’m buying from a trader?
Traders have to identify themselves as such when they offer goods or services for auction, so that consumers will know they are covered by the Fair Trading Act and the Consumer Guarantees Act.
It is the responsibility of the intermediary (e.g. the online auction site to make sure their participants who are in trade declare themselves as traders.
If you suspect a seller is a trader but not identifying themselves as such, read the information on our Online sellers page.
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Who can I complain to if I believe the auctioneer has broken the law relating to the auction process?
Your first step would be to make a complaint to the auctioneer or, if the auctioneer is employed by an auction house, to the auction house.
If you are unsatisfied with how the auctioneer or auction house has responded to your complaint, you can escalate your complaint to the Auctioneers Association of NZ (AANZ). The service is free if the auctioneer is a member; if they are not a member, the Association will charge you a nominal fee to cover costs. You can check this directory to see whether the auctioneer is a member. Your complaint needs to be in writing, either by email or via AANZ’s web contact form.
You can also report the auctioneer or auction house to the Commerce Commission if you think they have breached the law in regard to how an auction has been run. Information about how to do this is on the Commerce Commission website. The Commerce Commission won’t be able to act on your behalf, but they may investigate if they receive many complaints about the auctioneer.
If you have suffered financial loss as a result of the auctioneer’s conduct you can take the matter to the Disputes Tribunal.
Under the Auctioneers Act, all auctioneers must be on the Auctioneer’s Register (with a few exceptions). You can search the Registers to check whether an auctioneer is listed. You can report an unregistered auctioneer to the Commerce Commission or to AANZ.