If you have never been to an auction before, not to worry! They aren’t as scary as you may think. Here is what you should expect when attending a property auction.
What To Expect at an Auction
Many buyers view auctions as a stressful experience that can lead to spur-of-the-moment decisions. But, more often than not, this only happened by unprepared buyers. At an auction, registered bidders are able to openly compete for the property or land for sale.
Once one buyer has offered a starting bid, the auction begins. It will continue until either the highest bid is received or until ‘the property passes in’ (which means the seller/vendor declines to sell at the highest offered price). If the seller declines, generally negotiations begin with the highest bidder for a price that satisfies both parties.
If you are a registered bidder, make sure you start your bidding low. Make your bids fast and assertive, and project confidence. Remember to call out your offers in full, not just the increments.
There are many benefits to buying a property at auction, including:
- At all times you know what the competing offer is.
- You can see and read your competitions body language.
- There is a publicly benchmarked price.
- You get an immediate result.
To Be Confident, Be Prepared
There’s no such thing as being too prepared, especially at an auction. You want to enter an auction as confident as possible, which means having as much knowledge and understanding about what you are bidding on as you possibly can. Make sure – before even attending the auction – that you set a ‘walk away’ price. This will prevent overspending and those spur-of-the-moment decisions we mentioned above from happening.
You also need to make sure you have all of your finances ready to go. The documentation that you need prepared prior to bidding on a property at auction may vary from State-to-State in Australia, so make sure you know what you need beforehand. Another great tip is to attend some other auctions before the big one. This will give you a clear understanding of how they work, what you can expect and possibly even an insight into some of the strategies utilised by other buyers.
Sometimes Things Don’t Always Go to Plan
There are times where a property auction will not go as planned. Usually, this happens when the property ‘passes in’ (doesn’t sell), if the guide price and vendors reserve are exceeded or on a rare occasion the bidding has been artificially raised.
Should the property passes in and doesn’t sell, this doesn’t mean that you have missed out. If you have managed to be one of the highest bidders, then generally you will be given another chance to negotiate. Whether this is a legal right or as a courtesy, depends upon the State laws in which the property resides. Visit the Queensland Government’s website on Buying Property at Auction, for more information.
In popular areas and growing markets, it is common for a property to sell at auction for more than the guide price and the vendors reserve. This just means that there are other buyers willing to pay more for the property than you are. If that’s the case, you simply need to move on to something better suited to you and your budget.
If you suspect fake bids are being used to raise the price at auction, you can lodge a complaint with the Office of Fair Trading. The same applies if the guide price has been underquoted. This is a very rare occurrence; real estate agents and auctioneers are all highly-regulated and must operate within the law.
In the end, it’s important you remember your budget, don’t get emotional, do your homework and be confident. Auctions generally come down to a whole lot of skill and a little bit of luck.