Un­der­stand­ing the auc­tion pro­cesses

Whitsunday Times - - REAL ESTATE - Consumer tips pro­vided by REIQ

Tips for sellers

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.

There are some com­pelling reasons to choose auc­tion over pri­vate treaty:

You have some cer­tainty around when the house will sell (un­less it is passed in).

Com­pet­i­tive bid­ding means no up­per price bar­rier. A sale at auc­tion is un­con­di­tional. In­spec­tions are con­trolled through open house days or ap­point­ments.

Tip: Mar­ket­ing the prop­erty

The auc­tion process be­gins when the seller signs an au­thor­ity with the agency that gives per­mis­sion to take the prop­erty to auc­tion. This process also in­volves the sellers sign­ing off on the mar­ket­ing plan pre­sented by the agent, which is key to at­tract­ing po­ten­tial buy­ers.

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).

Tip: Check agent’s cre­den­tials

Sellers should also take note of the agent’s cre­den­tials as only li­censed real es­tate agents and auc­tion­eers are trained to sell real es­tate and those who are members of the REIQ are bound by our Stan­dards of Busi­ness Prac­tice.

Tip: The auc­tion process – three stages

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’ (i.e. – not sell­ing un­der the hammer). At this point the seller can re­con­sider the re­serve price.

If the prop­erty passes in, the real es­tate agent will usu­ally 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.

Over­all, there are many pros and cons to buy­ing and sell­ing at auc­tion and the num­ber one golden rule to do­ing well at auc­tion, whether you’re a buyer or a seller – is to do your home­work and be pre­pared for all even­tu­al­i­ties.

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