Auctions in Melbourne account for approx. 70% of all property transactions.
Auctions are popular with owners as there is no price disclosure, buyers compete for the property, there is no ‘cooling off’ and the Auction date creates a deadline for all interested parties to act.
Auctions generally start with a 3-4 marketing program. The property can be sold at any time if the owner chooses to accept offers put forward. This means that, subject to the vendor’s instructions that the property could be sold prior to auction.
If an offer is considered by the owner prior to auction, then most likely, the owner will require that this offer be on a contract, have a cheque for 10% deposit and a their contract checked by a lawyer. This essentially means that the property is sold under the same conditions as it would had it sold under the hammer at Auction.
TOP TIPS – How to Buy a Property Well at Auction
If you intend to bid at an auction there are a number of things that you should consider prior to the auction. Here are a few things worth thinking about:
- Conduct your due diligence before the auction – get the contract checked by a professional, arrange a building & or pest inspection, and if strata titled, request a strata report of the property.
- Have your Finance prepared – ensure you have the 10% deposit as a bank cheque, personal cheque, cash (not preferable) or deposit bond. Make sure you have funds approved by a broker and you are in a position to bid on the property. (How much can you borrow? Loan Market Link)
- Have a several inspections of the property – It is always wise to view the property on several occasions so you know that this is right property for you. Generally the property is open for inspection, but sometimes private appointments can be made.
- Arrive at the Auction early – With Ray White Taylors Lakes you need to be registered in order to bid. You need photo ID (Drivers Licence or Passport) to prove your identity. If you are bidding on behalf of any other individual or entity, you need an authority to bid (insert authority to bid form).
- All registered and ready to Bid – Once registered you receive a bidding card with an exclusive number. This is required when bidding. You will also receive a copy of the Bidders Guide. Use your bidding card to allow the Auctioneer to accept your bid.
- Have a Plan – Most buyers have very little idea of what to do when bidding at Auction. Any plan is better than nothing, but the best plan is participate. You cannot buy the property without bidding. Get in early, even if that is a little lower value than you are prepared to pay and get used to the process. Make sure you don’t go over your top price by getting overawed by the moment. Pick a last bid and stick to it.
- Start the Auction. Often when the auctioneer asks for an opening bid everybody waits for each other, it’s so polite! Being the opening bidder clearly signals your intention to purchase the property and puts any other pending bidders on notice that they will need to act. It can pay dividends to be bold.
- Be clear and confident with your bids. This will show any other parties that you are genuine and determined to buy the property.
- Pay close attention to the agent and auctioneer. They will keep you informed and let you know when the ‘property is on the market’. Also, in the event you are the highest bidder, they will inform you as to what price you can buy the home for (under the auction conditions).
- Should you be the eventual purchaser on the day (well done!) then be prepared to pay the 10% deposit (unless otherwise agreed to a different amount prior to auction) and sign the contract. If you are bidding over the phone, the Auctioneer can sign the contracts on your behalf.
- Passed in, Not SOLD –Passing in means that the bidding fell short of the owners reserve and they will negotiate from the last bid with the highest bidder. The highest bidder is offered, as a courtesy, the first right to negotiate with agent after the property passes in. Make the most of this as if a deal is not reached, then all parties, bidders at the auction or not can then negotiate.
SOLD! – Even if you don’t buy at your first Auction, you are better informed and confident for the next. If you are the highest bidder, congratulations! You will now need to sign the contract and provide your 10% deposit. The owner signs their contract and the contracts are exchanged. You will receive possession of the property once settlement has taken place, subject to any tenancy.