Selling A Property At Auction
For many people the auction process is an attractive one. Unless something goes drastically wrong, you are have a good chance of selling your house on a particular date for at least the minimum price you want. And since auction is a sale through exclusive agency, where only one agent lists your property, agent fees can often be substantially lower.
How To Choose An Auctioneer?
Firstly, it's essential to ensure your chosen agent is competent and qualified. Try to select an agent with multiple successful auctions under their belt and don't be afraid to ask them exactly what their track record is like. First timers may be enthusiastic and positive but may not have the skills and experience to get you the price you want, or that your house deserves.
Try checking out other auctions happening around town and compare the styles and success rate of local auctioneers. When interviewing potential auctioneers, don't be afraid to ask them for a breakdown of how they intend to advertise your house and their personal preferences regarding the auction process.
Don't assume that the one who charges the highest fees is going to be the best, any more than the one who charges the lowest is automatically the worst. Most agents work on a commission basis so the more you get for your house, the more they earn in the long run.
The Agency Auction Agreement
It is essential to select your auctioneer carefully as, once you sign the agreement, it is legally binding. The auctioneer has no obligation to let you out of the agreement if you are unhappy with the service provided. Negotiate the details of the agreement carefully, such as the length the agreement should last and the fees involved, and always make sure you are familiar with all aspects of the agreement before you sign it. Seek advice from a qualified 3rd party professional if needed.
What Happens Before The Auction?
This follows a similar process for any sale of property. Your agent will arrange for an advertising campaign to raise the interest of potential buyers. This could be through print media, such as the local newspaper, internet advertising or word-of-mouth. They will often contact people who showed an interest in the past towards a similar property and inform them of the upcoming auction.
Your agent will also arrange for a number of open house inspections - set times when anyone can come into your property to look around. Your agent should keep a log of all people entering the property on each of these occasions so they can ascertain how many are repeat visitors. People who inspect more than once are often showing a genuine interest as a potential buyer.
What Happens On Auction Day?
Before the auction starts, the auctioneer will often arrange one last open house inspection. At this time, at least 30 minutes before the beginning of the auction, your agent is required by law to display certain documentation at the location of the auction. The auctioneer must also make a general announcement before the auction starts detailing this information. Documentation required is:
- documents detailing the laws applying to auctions in your state; and
- the rules applying to this particular auction, including whether vendor bids and/or co-owner bids will be used.
The auction often starts with the auctioneer asking for an opening bid. They will then set an amount by which all bids must rise, such as in increments of $5000. Bidders can offer an alternative amount, such as $1000, however it is up to the discretion of the auctioneer as to whether the offered amount is accepted.
Once the property's reserve price has been reached it is considered to be 'on the market' and will be sold to the highest bidder. If the reserve price is not reached, the auctioneer will confer with the seller to determine whether they are happy to sell at a lower price. When the final bid is reached and the seller is happy with the price, the auctioneer will announce "going once, twice, three times …" and if no more bids are offered he or she will then call, "SOLD".
What Happens After The Auction?
Immediately following the auction the required deposit must be paid by the buyer, generally any amount up to 10% of the purchase price. The balance is paid on settlement.
The sale of the property is not finalised until both seller and buyer have signed the contract and all relevant checks and transfers have been made. Once this is completed and the balance of the purchase price paid, then the property is officially sold.