If you are selling a property by auction
You will need a sole agency agreement with an agent, have an agreed marketing plan and establish a reserve price in advance of the auction.
The reserve price
Is the lowest price the seller is willing to accept for the property and is confidential to the seller.
A property may be sold in advance of an auction
However, the terms and conditions must allow for this. Your agent should also make sure that any marketing material makes this clear. Potential buyers can register an interest with the agent and ask to be informed if an offer is made.
Auction sales and purchases are unconditional
A buyer cannot attach conditions to an auction purchase. Once the bid is accepted and the auctioneer’s hammer has fallen the sale will be unconditional and must go ahead.
What a buyer needs to do before bidding for a property at auction
You will need to do all your research on the property before the auction. You should commission a building inspection, a title search and a Land Information Memorandum before the auction. You will need to arrange any mortgage and finance and also consult your lawyer in advance.
If you haven’t attended a property auction before
You will need to register to take part in the auction and know what to expect on the day. Auctions are fast-moving events. Ask the agent marketing the property to explain the auction process to you.
Sometimes during an auction, the auctioneer or some other person working on behalf of the seller (such as the real estate agent), may make a bid on behalf of the seller. This is called vendor bidding. Vendor bidding is sometimes used by the auctioneer as a way of starting off the bidding or trying to move bidding towards the reserve price. Vendor bidding is only allowed if all three of the following conditions are met: The property being auctioned has a reserve price The reserve price has not been met The auctioneer makes it clear that the bid being made is a vendor bid. Vendor bids must be clearly identified by the auctioneer and they will say something like “This is a vendor bid”. They will not be able to use auctioneering jargon such as ‘The bid is with me’.
21 Good Reasons to Sell by Auction
1. Control - You control the process rather than the buyers
2. Eliminate Finance Problems - Cash unconditional
3. Open to Everyone - Anyone can bid at auction
4. Confidentiality - Your price expectation is not revealed
5. No Cooling Off Period - The sale is complete
6. Faster Sale - Reduces time in the market
7. Urgency - Limited time means buyers must act
8. Deadline - Auction date brings negotiations to a head
9. Certainty - Plan your future with confidence
10. Competition - Buyers compete amongst themselves
11. Aside Agreements - Vary on terms to suit yourself
12. Reserve Price - To protect your investment
13. Exposure - Maximum profile according to your budget
14. No Procrastination - Qualified buyers and sellers
15. Maximises Price - Competition promotes the best price
16. Skilled Auctioneer - Best negotiator on your behalf
17. Negotiations - Go up rather than down
18. Professional Room - Conducted in business-like surroundings
19. Settlement to Suit You - 30, 60, 90, 120 days?
20. 10% Deposit - On fall of hammer
21. Peace of Mind - Avoid the fear of collapsed contracts
*Based on Roger's two decades of auction success.
If you are not auctioning your property you are missing out on the highest bid.