REAL ESTATE AUCTION
SELLING AT AUCTION
When selling your property, there are quite a few different modes of sale you can opt for. However selling your home through auction has many benefits, such as:
You set the terms and conditions of sale
Target marketing puts a spotlight on your property
Marketing with no price attracts genuine, cash in hand buyers
Auctions create a sense of urgency, bringing buyers to a point of decision
Preparing for an auction
Auctioning your property is about so much more than simply showing up on auction day. There’s a lot that goes into it beforehand to ensure you achieve the best result possible for your property. Marketing your property well is chief among the things you’ll need to do.
Your sales consultant should walk you through your marketing plan in detail, from the images that’ll be selected and advertised, the copy that will be included, to where the property will be advertised (online, papers, brochures, in office, etc.)
What is your role on auction day?
If you’re in the country, the best recommendation is to attend your auction. It’s great to have you there if there are any last minute questions.
Your auctioneer will also want to confer with you depending on how the auction is going. If bidding stops below your reserve price for example, your auctioneer will want to discuss next steps with you.
The reserve price
It’s important for you to understand and be clear on what your reserve price is, and how it’s used during the auction.
There are three types of figures to consider before the day:
Your best price – The figure you’d be very happy to accept.
Your ok price – The figure you’d be ok with based on the feedback you’ve received, you don’t see a win but you don’t see a loss.
Your accepted price - This last figure is basically the one you wouldn’t be thrilled with, but given market conditions, you’re prepared to sell at that price.
BUYING AT AUCTION
The auction process may seem daunting, but there are many advantages to purchasing at auction. One clear advantage to attending an auction is you can be confident that the true market price for the property will become clear. Here are some other clear benefits to buying at auction:
You know who your competition is on the day
All buyers are given fair opportunity to buy
Negotiations are open for all to see
You know you are dealing with sellers who want to sell on the day
At the fall of the hammer, the auction is final and your successful bid means the property is yours with no further negotiations, and the contract is signed then and there.
Preparing for Auction
Once you have identified an auction property that you’re interested in, it’s important to have your finances organised by the auction date. This is also a good time to get all of your other affairs sorted, such as finalizing the sale of your existing property, organizing a property check and familiarizing yourself with all the auction documents.
If you’ve never attended an auction before it’s a good idea to have a look at a few before attending the auction of the property you intend to purchase. This will help you to become more familiar with the auction process.
Inspect the property as many times as necessary and, if you have any doubts, arrange for a builder, plumber, electrician or any other trades-person to accompany you.
Also, check the auction documents. Make sure you’re familiar with and understand all the details and conditions of sale (the deposit, possession date, balance of payment, list of chattels, etc). You don’t want any unexpected surprises come auction day.
Sorting out your finances
If you plan to buy at auction, it’s important to have your finances sorted out well before auction day to avoid disappointment. Buying a home through auction is a little different to buying a home through other methods of sale in that sales by auction are unconditional.
So it’s vital to have finance confirmed before you bid. Make sure you have a clear budget in mind for the property, and ensure you stick to it. If you are the successful bidder on auction day, the only thing left to do will be to sign the contract of sale.
At auction, you will need to have up to 10% of the purchase price ready to go at the fall of the hammer.
Doing your research
Once you have your finances in place, you’ve worked out your borrowing capacity, and sought pre-approval on your home loan, it’s now time to get to know the market.
If you have identified the property you intend to bid on, have a look at recent sales in the neighbourhood. A great place to start is online. There are lots of property comparison sites on the web which will give you an indication of the average sale price of houses, land and units in an area.
Take advantage of an open home and use the time to perform a thorough property inspection. Later on, you’ll want to engage the services of a professional to inspect the building’s structure and for pests, again, this must be done before auction day.
On Auction day
Auction day will be your last opportunity to ask questions before the bidding begins. You should also have an opportunity to give the home one final inspection.
Most auctions are held subject to a reserve price – the price below which a property may not be sold. When this level has been reached, the auctioneer will then announce that the property is for sale.
Be aware that any bid you make over the reserve price could be the one that buys the property.
Passed in is the term used when a property fails to reach the reserve price and negotiations between the highest bidder and the vendor do not result in a sale.
After being passed in, the property will now be open to the market, and everyone will have equal opportunity to submit their offer.
If you’re successful on the day you’ll be asked to sign the sales agreement and pay a deposit. This is normally 10% of the purchase price. You should be aware that there is no cooling off period on the purchase of a property at auction, as there is through other methods of sale. This is why it is important to do your due diligence on the property before auction day.
To schedule a free, no-obligation intro to Harcourts Auctions, send me a message.
We are proud to offer you a choice: Traditional or Auction Real Estate.