Auctions are popular in many markets, but they can be nerve wracking for everyone involved – not least the seller, who has a lot riding on achieving a good price.
But understanding what can happen on auction day can put you in the front seat to success.
An auction campaign
An auction is generally held as the culmination of a four week auction campaign. So the property is advertised and over three weekends open home inspections are held. On the fourth weekend the home is auctioned. Auctions can be an effective way to generate interest and competition among buyers.
The exact conditions around auctions vary slightly in each state and territory but there are some commonalities.
Before the auction
If the property is being auctioned on site, an open home is generally held prior to the auction itself. Here buyers will be able to have a last chance look around your property to ensure they are ready to purchase.
Your real estate agent will ensure your contract is on display as well as the rules and information that are required to be available to purchasers. And depending on the regulations in your state or territory, potential bidders may have to register in advance to bid at the auction.
During the auction
The auctioneer will introduce themselves, detail any particulars of the contract and will make any necessary announcements. It is common for the home to be talked about and its features highlighted. You can speak to the auctioneer before if there’s anything you would like mentioned.
An opening bid will then be called for and anyone who is interested in purchasing has an opportunity to start the bidding.
Vendor bids may be placed, but must be clearly announced to the crowd. Once the auction is underway it is down to the bidders to make themselves heard and the auctioneer to call for more bids.
At some point, the auctioneer may announce that the home is officially “on the market”, meaning that the vendor’s reserve price has been met.
The highest bid above the reserve will see the home sold. If no bids are made above the reserve, and the home is not announced as “on the market”, then the home is “passed in”. The vendor then needs to be prepared to negotiate through their real estate agent with the highest bidder.
Dummy bids or non-genuine bids are illegal. And Australian auctions are unconditional, and do not have a cooling off period.
After the auction
If the home was sold during the bidding then the purchaser will immediately be asked to sign the contract and pay the vendor a deposit.
However, if the home has passed in then negotiations with the highest bidder will begin. If this doesn’t turn into a sale then other bidders may be asked to come and negotiate. If the home sells at this time then it does so under auction conditions with an unconditional contract and no cooling off period.
If the property still has not sold then the vendor has the option to put the home back onto the market for a private treaty sale.