Top auction tips
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.
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’.
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.