Top auc­tion tips

Whitsunday Times - - REAL ESTATE -

WHEN it comes to prop­erty sales, Aus­tralia is an auc­tion­eer’s par­adise with one of the high­est rates of sale-by-auc­tion in the world.

There are some very com­pelling rea­sons to choose auc­tions.

And while greater num­bers are choos­ing to go to auc­tion ev­ery day, it is some­times sur­pris­ing to know how many buy­ers and sellers go into the auc­tion process with­out fully un­der­stand­ing it.

For sellers

Whether the house is sold at auc­tion or not, the seller will usu­ally have to pay for the agreed mar­ket­ing costs sep­a­rate to the com­mis­sion (un­less oth­er­wise ne­go­ti­ated at the time of sign­ing the con­tract).

Once the list­ing au­thor­ity is signed, there are three key pe­ri­ods in the auc­tion process.

The first is the pe­riod prior to auc­tion day, when the mar­ket­ing cam­paign be­gins, with ad­ver­tis­ing be­ing placed and open houses be­ing sched­uled.

It is ad­vis­able to have as many ap­point­ments or open days as pos­si­ble (even though this can get te­dious) as this is the key to at­tract­ing bid­ders at the auc­tion.

Next is the auc­tion day it­self. At this stage the seller will have a re­serve price ready to pass to the auc­tion­eer on the day of the auc­tion.

The re­serve price is usu­ally set us­ing a com­par­a­tive mar­ket anal­y­sis and in dis­cus­sions be­tween the agent and the seller.

If the high­est bid reaches or ex­ceeds the re­serve price, the prop­erty is sold ‘un­der the ham­mer’ (i.e. 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 will look to the seller for fur­ther in­struc­tions be­fore ‘pass­ing the prop­erty in’.

For buy­ers

From a buyer’s point of view, open houses and in­spec­tions by ap­point­ment are the best time to make in­quiries, get a copy of the Con­tract of Sale, take a good look around the house and clar­ify small par­tic­u­lars.

It is also the time when build­ing and pest in­spec­tions should be – gen­er­ally at the buyer’s cost.

It’s im­por­tant to ar­rive early on auc­tion day. This gives the buyer the chance to make sure there are no late changes to the con­tract and get them­selves ready to bid.

Po­ten­tial buy­ers will also be asked to reg­is­ter as a bid­der with the auc­tion­eer be­fore the auc­tion be­gins.

The auc­tion will be­gin with the auc­tion­eer read­ing the de­tails of the prop­erty and con­di­tions of sale by auc­tion. Then the auc­tion­eer will call for bids.

Buy­ers should raise their hand to make a bid, and call out a bid if they want to move it by larger or smaller amounts.

A good tip is to stand where you have a good view of other bid­ders.

It is im­por­tant that buy­ers know their high­est price range be­fore the bid­ding com­mences.

If the buyer suc­ceeds at auc­tion they must be pre­pared to sign a Con­tract of Sale im­me­di­ately.

Usu­ally a de­posit of 10% is re­quired un­less oth­er­wise agreed prior to the auc­tion.

If the re­serve price has not been reached dur­ing the course of the bid­ding and the prop­erty is passed in for sale by ne­go­ti­a­tion, bid­ders are able to ne­go­ti­ate to buy the prop­erty.

The num­ber one golden rule to do­ing well at auc­tion, whether you’re a buyer or a seller, is to do your home­work.

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