Un­der­stand­ing the auc­tion process

Whitsunday Times - - DOMAIN -

AS A sales method, auc­tions can gen­er­ate ex­po­sure, achiev­ing max­i­mum mar­ket­ing im­pact; com­pet­i­tive bid­ding means no price bar­rier; a sale at auc­tion is un­con­di­tional and there­fore def­i­nite; and in­spec­tions of the property are con­trolled through open houses or ap­point­ments.

Real Es­tate In­sti­tute of Queens­land (REIQ) man­ag­ing di­rec­tor Dan Molloy said the most im­por­tant as­pect of any property trans­ac­tion, in­clud­ing auc­tions, whether you’re sell­ing or buy­ing, is do­ing your home­work. The auc­tion for sell­ers From a seller’s view­point the auc­tion process be­gins when the seller signs an ap­point­ment with an agent giv­ing them per­mis­sion to take the property to auc­tion. Be­fore sign­ing an ap­point­ment, sell­ers agree on the mar­ket­ing pro­gram and budget, which is the key to at­tract­ing a wide range of in­ter­ested po­ten­tial buy­ers, with the agent.

“Sell­ers should also take note of the agent’s cre­den­tials. Agents rep­re­sent­ing a REIQ ac­cred­ited agency are bound by the In­sti­tute’s Stan­dards of Busi­ness Prac­tice and sell­ers have the added se­cu­rity of know­ing the agent can be sub­ject to dis­ci­plinary ac­tion via the REIQ’s Real Es­tate In­dus­try Pro­fes­sional Stan­dards and Con­sumer Com­plaints Tri­bunal,” Mr Molloy said.

Once the list­ing ap­point­ment is signed, there are three key pe­ri­ods in the auc­tion process. The first is the pe­riod prior to the auc­tion day when the mar­ket­ing pro­gram is put into ef­fect, ad­ver­tis­ing be­gins, and in­spec­tions or open houses take place. The REIQ rec­om­mends sell­ers dis­cuss with their agent the best num­ber of open homes and op­ti­mum time of day to present the property.

Dur­ing this pe­riod, the agent will also pre­pare the Con­tract of Sale for the in­for­ma­tion of prospec­tive buy­ers and for dis­play on auc­tion day. The REIQ’s stan­dard res­i­den­tial con­tracts, ap- proved by the Queens­land Law So­ci­ety, are proven documents writ­ten in plain English, giv­ing sell­ers peace of mind in know­ing that buy­ers will bid with con­fi­dence.

Next, is the auc­tion day it­self. At this stage, the auc­tion­eer will re­quest writ­ten ad­vice from the seller as to the re­serve price. The re­serve price will have been de­ter­mined with help from a com­par­a­tive mar­ket anal­y­sis pro­vided by the agent. From this anal­y­sis a price range will have been es­tab­lished and a re­serve price nom­i­nated.

If the high­est bid reaches or ex­ceeds the re­serve price, the property is sold ‘un­der the ham­mer’ (for ex­am­ple at auc­tion) and the Con­tract of Sale is signed im­me­di­ately by the buyer and the seller. Should bid­ding not reach the re­serve price, the auc­tion­eer may look to the seller for fur­ther in­struc­tions with re­gard to the re­serve price, be­fore ‘pass­ing the property in’ (for ex­am­ple not sell­ing un­der the ham­mer).

Fol­low­ing an auc­tion where the property has not sold un­der the ham­mer, the real es­tate agent’s exclusive agency continues for the re­main­der of the agency pe­riod (up to 60 days) to achieve a pri­vate treaty sale.

“The real es­tate agent will fol­low up all en­quiries made be­fore and af­ter the auc­tion day and con­tinue to pro­mote and mar­ket the property, en­deav­our­ing to achieve a sale as soon as pos­si­ble,” Mr Molloy said.

If you’re think­ing of buy­ing or sell­ing a property make sure you choose a REIQ ac­cred­ited agency.

“It is im­por­tant for con­sumers to be aware that not all real es­tate agents are REIQ ac­cred­ited agencies. The REIQ ac­cred­ited agency logo is dis­played in the front win­dow of ac­cred­ited agencies and serves as a vis­ual safe­guard to help con­sumers make in­formed and con­fi­dent choices,” Mr Molloy said.

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