Buying at auction
"An auction is an exciting environment where everything is out in the open".
Buying at auction avoids the often prolonged waiting of the traditional offer/counter-offer negotiation process and uncertainty of what another buyer may be offering. During an auction bids for the property are called in an open arena on a given day and time. If your bid is accepted you’ll have the satisfaction of knowing you have purchased at true market value.
An auction is an exciting environment where everything is out in the open. You can see your competitors and have confidence that others place similar value on the property as you.
Let your consultant know if you are interested in an auction property so that you will be kept informed if a pre-auction offer is made and given the opportunity of submitting an offer or bidding if the auction date is brought forward. Your consultant will be able to provide you with an interested bidder’s information booklet on the particular auction property.
Frequently asked questions about buying at auction
Q1. Do I have to have cash to bid?
Yes. To bid at an auction you need to acquire pre-approved finance so that you can bid with no conditions of sale. A 10% deposit is required on the day of auction; the balance due on possession date.
However it is often possible to extend the possession date to allow you more time to organise your funds or sell an existing property. Talk to your consultant so they can arrange this with the sellers and auctioneer.
Q2. How do I find out how much the property is worth?
The more property you inspect in the area the better you will become at determining approximate values. If you need help ask your consultant for guidance. They can refer you to homes of similar type and price for comparison. You may also opt to pay for a registered valuation. Remember pricing real estate is not an exact science as come auction day what the seller needs to move on and the emotional desire of other bidders will determine the end selling price. We recommend you arrange a little extra finance just in case.
Q3. Can I make an offer before the auction day?
Some owners may consider selling before auction day, some may not. Usually the offer would need to be a very good one to convince a seller not to hold the auction. If an acceptable pre-auction bid is tabled all interested parties are contacted and given the opportunity to also submit an offer or bid if the auction date is brought forward.
Q4. What is a seller or vendor bid?
The conditions of sale state the seller has the right to bid themself. This can be compared to a counter offer during private negotiations. This bid may be used by the auctioneer to start the auction or bid during the auction to build bidding momentum. The auctioneer will disclose all vendor bids and will not bid on behalf of the seller once the property’s reserve price has been reached, that is a price sellers are prepared to sell for.