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Your First Auction? Make It A Success!

Your First Auction? Make It A Success!

  • 26 Feb 2018
  • Meg Georkas

We have a fantastic property coming up for Public Auction next month in Barney Street, so I thought I would run through a few tips about buying a property at Auction.

While attending your first auction as a potential buyer can be a little overwhelming, its also a chance to control what you want to pay for a property. But you need to do your homework before the day! There’s a lot of money riding on the result and you don’t want to be caught in an uncomfortable position because you’re not sure of the rules and procedures that govern auction day.

Here are the important things you need to be across.

Know the Rules

As a potential bidder and buyer at an auction, it’s critical that you’re well versed on the rules.

The Auctioneer will always read the terms under which the auction will be conducted, prior to taking bids, but trying to remember all of them the first time you hear them can be difficult. Talk to the HH Team before the day and make sure you’ve seen a copy of the contract. You also need to have completed any searches and inspections prior to the Auction day.

Preparing for Auction Day

You need to be aware of the implications if a property is below, or has moved past, its reserve price.

One of the most important thing is to understand the actual rules for the auction itself and the nature of whether you’re bidding for the property, or the right to negotiate below the reserve price. Once the reserve price has been reached and announced, you should understand that any bid from that point on means ownership of the property. Don’t be caught out holding back and allowing the property to be sold to someone else because you haven’t quite understood the mechanics of the decision and the language around being ‘on the market’, or ‘past reserve’, ‘for unreserved sale’, or ‘playing for keeps’, which are all terms that can be heard at an Auction.

Know the Process

If a property fails to meet its reserve price and is passed in, that doesn’t mean it won’t be sold. But if you want the first opportunity to negotiate with the agent / vendor, you need to ensure you’re the highest bidder. Remember the reserve is not disclosed to anyone except the agent on the day of Auction. This is another reason to do your homework.

Negotiating After the Property Has Been Passed In

Take this scenario: an auction starts, and the vendor’s reserve is $500,000, the auctioneer may start the bidding at $400,000.  Now if two buyers fight it out and the bid gets to $490,000 and then stops, the highest bidder won’t be buying the property at that point in time. But under the guidelines the highest bidder gets the first chance to negotiate with the vendor at their reserve price. The negotiation will be handled by the agent. Should the highest bidder reject the vendor’s price after the auction, they lose the exclusive right to negotiate, and other buyers may become involved.

Do you Need to Register?

YES! Legislation regarding whether buyers are required to register before making a bid varies from state to state. But in New South Wales, you legally you need to register beforehand to be able to bid. You must show photo ID with your current residential address. You cannot bid if you haven’t registered.

You’ll Need Your Deposit

Now if you are the successful bidder, you must pay the required deposit then and there. You need to be aware of that the fact that if you are looking to bid at an auction, you have a legal obligation to pay a deposit for the home, and usually that deposit is 10% unless otherwise arranged.

Understand It’s Final

Two original copies of the Contract of Sale will be signed by the successful buyer and the vendor / agent. With the deposit paid and the contracts signed, an exchange occurs, and the property is then considered sold. There is no cooling off period. Time for a sold sticker and photo op!

Buying at Auction doesn’t have to stressful if you’ve done your homework. Come and talk to the HH team and we will walk you through the process.

Opinions are those of Meg Georkas and may not reflect those of others.

Highly Recommend!

Peter is an outstanding agent with many years of experience. He went above and beyond to assist with the purchasing of my property. He was always professional, reliable and helpful. In addition, he was efficient and punctual at all times. Thanks Peter for the great service, look forward to dealing with you again in the future.
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- Buyer

The Ultimate Professional

Peter showed the utmost integrity, courtesy and professionalism in the selling of our home. He was never too busy to answer any question we had and kept us informed of all developments. We wouldn’t choose anyone else to look after our sale.
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- Vendor

Exceptional advice, professional seller of our home

We have bought many houses, and sold many houses, but we could never imagine our home would sell so quickly. Peter reassured us from first inspection that he would find us the right buyer, the buyer who would love our home as much as we love it. Our home sold phenomenally quickly, the suited buyer was just around the corner! Peter was flexible with showing people through, and we really appreciated him touching base with us every step of the way. Thank you Peter, we couldn’t have asked for a better agent to work with us!
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- Vendor

Great service from Peter and his team as always!

There is no hidden agenda with this agency, they try to make the best fit for your needs. This is the only agency in town that has always sent me through info about houses that I may like. Thanks H&H
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- Buyer