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THE AUCTION GUIDE

An Auction in real estate is a sales method through the process of bidding, where the interested parties will gather together to the advertised place and time to make offers on the property they wish to purchase. Although there are other ways to sell your property in Australia such as a private sale or an expression of interest/tender, Auctions are fast becoming one of the most popular sales methods for its benefits.


So, What are the Benefits?

  • Quicker Sale: Auctions are most successful in selling your property within a set time frame. As Auctions happen on a set date, this creates urgency for prospective buyers, and thus a quicker sale with a higher chance of reaching the premium price.

  • Maximised Marketing Program: Auctions use a marketing program that generally goes over a 3-4 week period to get the best offers from buyers who are looking. Within this short period of time, the property is advertised on all levels of marketing platforms (company website, social media, realestate.com, brochures & flyers etc) to attract maximum interested buyers.

  • Inspections: Inspections are set on specific times and everyone will know exactly how many inspections are on which day. As a seller, this means you will have minimum disruptions to your home or to the tenants if your property is currently being rented out.

  • On-site Sale: Auctions are generally held on site which maximises the interest and selling potential of the property.

  • Price Range: The property has no “price tag” and thus prospective buyers are not comparing the property on price alone. It also encourages the greatest range of buyers who may otherwise only be looking within a certain price range.

  • Reserve Price: With an auction, you have the benefit of a “reserve price” so for the seller, you will never sell your home for less than what you want.

  • Unconditional Contract: Auction contracts are unconditional, meaning that if the property is sold on or before the auction date, the contracts are final. This means both the seller and the buyer are assured of a set settlement period and that there is no cooling off period, resulting in a quicker sale.

Are there any Cons?

Definitely yes - Although Auctions have multiple benefits for both sellers and buyers, this sales method has a list of cons that all interested parties should be aware of.

  • Unconditional Contract: Auction contracts are unconditional and can’t be subject to finance or inspection, which may not suit some buyers. Hence, this can eliminate number of interested buyers and reduce number of offers received for the property.

  • Risky: For the seller, there is no guarantee your property will sell successfully at an auction. The reserve price is not always met. There is also a risk that you will set the reserve too low and sell too cheaply, or too high and not sell at all. In addition, the market value of the property is decided on the spot. You can never be sure of precisely how much you will get.

  • Auction can "Pass-In": For the seller, if the Auction is passed in, the property could be more difficult to sell, as potential buyers have a better idea what others are prepared to pay and reduce their offers accordingly.

  • Marketing: For sellers, marketing costs tend to be higher.


How Bidding Works

You can bid pre-auction or on the auction day. The lead agent will be the main point of contact for any inquiries, open homes, private inspections and negotiations.

Registration

If you are an interested buyer, you will need to be registered in order to participate in the bidding process. You can register at any time prior to the auction. You will need to provide the Auctioneer with your name and address along with some photo identification. The Auctioneer will then record these details and provide you with a Bidder number, which you will display when making a bid during the process of auction. Note: You do not have to bid just because you have registered.


How to Bid

When you wish to bid, hold up the bidder number and call out your offer in a clear voice. Make sure the Auctioneer can see you and hear you. With the bid, you can call out an exact amount of your bid, or you can indicate the amount you wish to increase the previous bid by. If the Auctioneer calls the incorrect amount, call out straight away and clarify your bid.


Key Things to know before Auction

  • Conditions of Sale: Both the buyer and the seller should be aware of conditions of sale prior to committing to an Auction. If you are a buyer bidding on behalf of another person, make sure to arrange and bring the letter of authority. You will have to present the name and address details of the official buyer to the Auctioneer in order to register successfully.

  • Have your Finance Sorted: Once a bid is successful on Auction day, the deposit needs to be paid, and the contract immediately signed. If you are a buyer, this urges the importance of having your finance pre-approved if going through a financial institution, to ensure that you have the deposit amount ready. The deposit is usually 10-20% of the sales price, and this should be kept in mind when offering the bid, as there is no going back once the hammer hits the board.

  • Settlement Date: Just like any other sales methods, settlement periods can vary from usually 30-90 days. As a buyer, it is important that you are aware of the settlement date noted in the contract so that you are prepared for everything without any surprises. If for some reason you cannot follow through with the contract, there is a risk you will lose the deposit paid and may be liable for any other losses made by the seller.

  • Do your Research: All your pre-purchase checks and research should’ve been done prior to the Auction day. This includes but not limited to building and pest inspections.

If you need more information on the laws that apply to property auctions, please contact The Office of Fair Trading on 13 74 68 (within Australia) or +61 7 3328 4811 (International Callers), or visit their website https://www.qld.gov.au/law/fair-trading.


(Reference: REIQ - Real Estate Institute of Queensland)


Is Your Property Ready for an Auction?

Please feel free to contact us for further guidance on your property. We are available through our Website, Instagram, or on the Phone (Fiona Tan 0402 889 188).

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