An auction sale completes on the fall of the gavel, with the contract signed and a 10% deposit paid
A worked RES examination question on methods of sale, from our Paper 2 bank — with the rule it turns on, and why each of the four options is right or wrong.
The question
At a property auction, bidding on a unit reaches its highest point and the auctioneer brings down the gavel. A separate unit fails to reach the figure the seller had privately set as his minimum, and the room is unsure what becomes of it — whether it is simply lost, or can still find a buyer another way after the auction has closed.
Consider the following statements.
- (i) The auction sale of the first unit is complete on the fall of the gavel.
- (ii) On the fall of the gavel, the sale contract is signed with a 10% deposit.
- (iii) For the second unit, the auctioneer may withdraw it on the seller's behalf, the reserve price not having been reached.
- (iv) A withdrawn unit that did not reach its reserve can never be sold by private negotiation afterwards.
The answer, and why
Answer: D
The rule. An auction sale completes on the fall of the gavel, with the contract signed and a 10% deposit paid. If the reserve is not met, the auctioneer may withdraw the property for the seller. A passed-in property can still be sold afterwards by private negotiation.
Why D is correct. (i) completion on the gavel, (ii) the signed contract and 10% deposit, and (iii) withdrawal for an unmet reserve are correct. (iv) is false — a passed-in unit can still sell by post-auction negotiation.
The other options.
- A adds the false (iv), the "never sold afterwards" claim.
- B drops (ii), the contract-and-deposit point.
- C drops (i), completion on the gavel.
Exam note. Gavel + signed contract + 10% deposit. A passed-in lot can still sell by private treaty afterwards.
More on Methods of sale
Want a full paper instead of one question?
The free half-paper is 20 questions with a Section B case study, explained to this same depth. The paid sets are ten full 80-question papers across Paper 1 and Paper 2, every figure checked against the current IRAS, CEA, HDB, URA and SLA position.
Looking for past-year papers? CEA doesn't publish them — here's what it does publish.
Independent study material. Not affiliated with or endorsed by the Council for Estate Agencies. No pass guarantee — for study use only.