AUCTIONEER'S TIPS FOR AUCTION DAY

Purchasing a property is a major decision and all of the process associated with it can be quite daunting. Auction day can be a nerve wracking day for all involved, but remember that the agent and auctioneer are there to assist you in your efforts to purchase and can often be your greatest allies on the day.

A few tips that may help you secure the property:

Bid with Confidence

The wait and see strategy is a popular one amongst purchasers but ultimately does little towards achieving a purchase. It is the bidder who bids with confidence and without hesitation that in most cases controls the flow of the auction. You are much better to set the tone and show your competition that you intend to buy, then sit back and potentially be on the back foot.

Work with the Auctioneer

Although the auctioneer on the day is employed by the seller, ultimately they want to achieve the same outcome you do – a sale. Ignoring suggested increments, interrupting & continually questioning if a property is “on the market” are not helpful to establishing a working relationship between both parties. You are welcome to suggest any bid or amount you like, but remember the auctioneer may refuse a bid if it is not deemed in the best interest of the seller. 

Vendor Bids

The auctioneer is legally allowed to make bids on the sellers behalf. A vendor bid must be disclosed by the auctioneer, who will use the words “vendor or seller” bid.

It is not the reserve price and indicates a price at which the vendor will not accept. A vendor or seller bid is used in different circumstances to either start the bidding, increase the bid to a level closer to what the vendors will make in buyer-centric.

Vendor bids are helpful because it gives you a better idea of what number it’s going to take to buy the property.

Increasing your own bid

Why must an agent or auctioneer ask you to increase your own bid? This is a common occurrence in today’s market so don’t feel uncomfortable about it. At some point in the auction, the estate agent or auctioneer may come up to you and ask you to increase your own bid. This may occur, as your current bid may not be at a price the vendor will accept. Therefore you may need to increase your own bid if you wish to purchase the property.

What happens if the property is passed in?

Most auctions I facilitate have conditional buyers (buyers that can’t bid under auction terms and conditions) waiting and hoping that the property passes in. Should the property pass in, everyone will have equal opportunity to submit their offer.

If you can bid under auction terms and conditions, give it your best shot at the auction as it is the most transparent way to buy and, in most cases, less competitive.

I would recommend going and spectating at a few auctions prior to participating. Watch which purchasers are successful and the tactics they employ. Feel free to get in touch with the agency, or call the Apollo Auctions team and we can supply you with addresses, dates and times of upcoming auctions that are close for you to view.


  BIDDING GUIDE

How to register

You can register at any time prior to the fall of the hammer. This can be at any of the open homes or in the period before to the auction. Registering to bid early will save you the stress of registering on AUCTION DAY when the property can sometimes get crowded.

In order to register you will need to provide the agency with your name and address and some photo identification. A drivers license or passport is normally preferred. Additionally, the agent may also request further proof of your current address.

The Agency will record these details and provide you with a bidder number. Even if you register prior to auction day, you will need to see the agency when you arrive at the action. After providing proof of your identify, you’ll receive your number of bidder card. You must display this number to the auctioneer when making a bid during the course of the auction.

If you register prior to auction day, you may not receive your number at that time. When you arrive at the auction, you will need to see the agency, provide them proof of your identity, and receive your number or bidder card at that time.

The Agency is not permitted to provide your information to any other person other than a Fair Trading inspector or the court. The Auctioneer, or Marketing Agent may disclose to the seller of the property the identity of a bidder if it is necessary for negotiating the sale of the property after the auction.

A few tips that may help you secure the property:

How to Bid

Make sure that the Auctioneer can see you. Remember to hold your bidder number high and call out your bid in a loud and clear voice.

You can call out an exact amount. For Example: “$570,000”; or indicate an amount you wish to increase the previous bid by . For Example: “Another $20,000”

If the Auctioneer calls the incorrect amount or misinterprets your bid, call out immediately to the auctioneer and clarify your bid.


  FREQUENTLY ASKED QUESTIONS

Can I buy before Auction Day?

Absolutely. In fact up to 50% of Auction properties are sold prior to auction day. However, the acceptance of offers prior to auction day is a decision made entirely by the vendor.

If you wish to submit an offer prior to auction please ensure you have undertaken all research and your due diligence as your best chance to have your offer accepted is to do so under auction conditions.

What if my Offer is not accepted prior to Auction? Have I wasted my time?

Definitely not, it may be that the vendor’s price expectation sits above the market’s expectation. Or perhaps your offer is under-estimating the value of the property. Regardless, after the vendor has had the opportunity to see the full marketing campaign and see the interest in the property on auction day, both parties will often re-evaluate their expectation.

What if I want to bid on Auction Day but cannot perform under the standard terms and conditions of the Auction?

Property transactions are a process of negotiation and buying at auction is no different. If you wish to alter the terms of settlement, deposit, inclusions or conditions of the contract of sale, just speak to the Listing Agent. However ensure you do not wait until Auction Day as this may be too late, these conditions must be agreed upon by the vendor prior to you commencing bidding.

Although you are at liberty to request variations you may not always get your way especially if there is strong interest in the property. If your conditions are not agreed upon prior to auction do not be deterred. If the property is not sold at auction the vendor is often more receptive to conditional offers subsequent to the day.


  BENEFITS OF BUYING AT AUCTION

Just as there are benefits to a seller who chooses to market their property by auction, astute buyers also may benefit by the process. These are some of the benefits to a buyer who chooses to buy at auction;

(1) May encounter less competition for the property

If a buyer is in a position to purchase at auction they may actually find they have less competition than if they seek to purchase a priced property. This is because some buyers are not in a position to buy under the cash-unconditional terms of an auction.

If a property “passes in” at auction (does not sell), often several buyers come forward afterwards seeking to buy with a range of special conditions attached to their offer (finance approval, building and pest inspections) etc.

This then places buyers in competition with each other post-auction. Some buyers have secured excellent value at auction simply because a cash-unconditional contract was a high priority for the seller who chose to take the highest offer under auction conditions rather than consider conditional offers afterwards.

(2) Competition at an auction is transparent

With an auction offers and negotiation are public - out in the open. With a private treaty sale (sale by price), if two or more buyers want the same property at the same time, it is standard practice that each buyer will not be aware of the offer being made by other buyers.

This means all competing buyers are “shooting in the dark”.

At auction all offers are made publicly (in the form of bids) and a buyer can choose to increase their offer only as much as they want to above the last highest offer. The buyer is free to withdraw from the bidding any time they feel the price has gone beyond the figure they are prepared to pay.

 

  CONDITIONS OF SALE BY PUBLIC AUCTION FOR REAL ESTATE QUEENSLAND
  1. All bidders must be registered. The auctioneer may register a person as a bidder only if the person has provided his/her name and address and satisfactory evidence of his/her identity. The auctioneer is required to keep the register of all bidders at the auction in accordance with Queensland Government regulations.
     
  2. Bids will only be accepted from registered bidders.
     
  3. Bidders must use the numbered identifier provided by the auctioneer to make a bid during the auction.
     
  4. The highest approved bidder will be the buyer subject to:
    • The reserve price; and
    • The sellers approval
       
  5. The seller may be bid, either personally or by a representative.
     
  6. The bidder warrants their ability to enter and complete the contract of sale in accordance with its terms.
     
  7. Any person bidding on behalf of another person must provide the auctioneer with a copy of their written authority before the auction, otherwise the bidder will be taken to be acting on their own behalf.
     
  8. The auctioneer has the discretion to refuse to accept any bid from any person. A bid will be taken to be accepted and irrevocable unless the auctioneer, immediately after it is made, refuses it.
     
  9. The decision of the auctioneer is final in all matters relating to the auction and no bidder has any right of recourse against the auctioneer or the seller.
     
  10. Without affecting condition 9, if there is any dispute over a bid, the auctioneer may:
    • Reopen the bidding and resubmit the property for sale starting with the highest bid previously accepted or;
    • Determine the dispute in any other way the auctioneer considers appropriate in his/her absolute discretion
       
  11. Immediately on the fall of the hammer, the bidder of the highest bid accepted must sign, as buyer, the Contract of Sale in the form displayed or circulated with these conditions of sale and pay the deposit to the nominated stakeholder.
     
  12. The deposit payable under the contract of sale is 10% of the successful bid or any other percentage or figure nominated in the Contract of Sale.
     
  13. The seller and the buyer agree to sign all documents and do everything else necessary to transfer the property to the buyer. The seller and the buyer each appoint the auctioneer their agent to sign the Contract of Sale on their behalf. This appointment is non-revocable.
     
  14. If the buyer does not pay the deposit, at the sellers option; The result of the auction will be treated as invalid and the property may be resubmitted to public auction at the risk and expense of that buyer; or The seller may affirm the Contract for Sale and pursue their legal and other remedies against the buyer as they see fit.

All bidders shall be deemed to have read and acknowledged the “Contract Warning” and the “Disclosure Statement” under the Body Corporate and Community Management Act 1997 which are annexed to the Contract of Sale by virtue of the fact that they have been on display prior to this auction. Cash unconditional basis, not subject to a cooling off period, finance, or building and pest inspection. GST may be applicable to the purchase price.

TERMS: $ DEPOSIT ON THE FALL OF THE HAMMER AND THE BALANCE IN CASH 30 DAYS, OR ANY OTHER SUCH DATE OR TERMS AS SPECIFIED BY THE AUCTIONEER PRIOR TO AUCTION.

 


  GLOSSARY OF TERMS

Agency

An agency is the relationship, which exists at law between two or more persons whereby one (the agent) is authorised to act on behalf of the other (the principal) to do certain specified acts. A common form of agency occurs in the sale, purchase and leasing of real estate.

“As Is”

Selling the property without warranties as to the condition and/or the fitness of the property for a particular use. Buyers are solely responsible for examining and judging the property for their own protection. Otherwise known as “As Is, Where Is” and “In its Present Condition.”

Auction

A preferred marketing option where you list your property without a price, supported by very intensive marketing leading buyers to the auction day where they must bid against each other to successfully purchase your property in an unconditional situation. / A public sale of property in which prospective purchasers bid until the highest price is reached.

Auctioneer

Person holding an auctioneers license and able to conduct and call auctions.

Bid

A verbal offer to purchase

Building Inspector

An authorised person who is responsible for checking buildings in the course of construction and completed buildings to ensure that they have been constructed in accordance with building control provisions.

Caveat Emptor

‘Buyer beware’, that the risk in a property transaction lies with the purchaser.

CMA

Current or Competitive Market Analysis (CMA), is a written price comparison of your property with others that are for sale or were recently sold.

Chattels

Items of property that can be physically removed from your house or business because they are not attached to it in some way. Examples may include fridges, curtains, carpets, easily removable light fittings and wall heaters, and sometimes furniture. If chattels are to be included in the sale, the seller should specifically state this in the Sale and Purchase Agreement.

Conditional Contract

Any contract that includes conditions that must be satisfied before the parties become bound to carry out the terms of the contract. The contract is called “conditional” until the conditions listed are satisfied. Both the buyer and the seller can put conditions in the offer. Buyers often ask for conditions about checking the Certificate of Title, and getting finance or a building consultant’s report. A conditional contract is still legally binding, but the obligations under it are suspended until it becomes unconditional.

Commission

The fees for selling the property - payable by the seller, to the real estate company.

Contract

The fees for selling the property - payable by the seller, to the real estate company.

Cooling Off Period

A short statutory period after the contract is made, during which the purchaser may cancel the con- tract unconditionally. Does not apply in the case of auctions.

Deposit

Percentage of total consideration, or an agreed amount, paid on exchange of contract for purchase of an asset.

Excluded Fixtures

Items that are presumed to stay with the property when sold but have been specified on the contract as not remaining.

Fixtures or Fittings

Items of property that are attached to the house or business because they are permanently attached in some way (by nails or wires for instance). Examples are the stove or oven, built in furniture, light fittings, fitted carpets and TV aerials.

Freehold

A freehold property has a clear title of ownership and is not subject to lease.

Included Chattels

Moveable items you decide to sell with the property, such as pool equipment, fridge, freestanding glasshouse, shed or playhouse, dishwasher etc. These are noted in the contract if they are included in the sale.

Leasehold

Sometimes land is subject to a lease. The owner of the land leases to the tenant for a fixed rental sum for a fixed period, e.g. # years.

Listing Authority

A contract between the owner and the real estate company marketing the property, detailing the length of the agency, commission rate and any additional costs. The type of marketing method to be used is assigned and a summary of information about the property is detailed on the listing authority.

Marketing Fees

Money paid by a seller that goes directly to increase advertising spread.

Marketing Program

A promotional package put together to give a property exposure to the market. It may include advertisements, a calendar of dates for advertisements, open homes, buyer contact and service.

No Price Marketing

Usually called ‘Auction’, ‘Tender’ or ‘For Sale by Negotiation’. The price is not revealed to buyers during the marketing promotion.

On the Market

During a real estate auction when the bid has reached the vendor’s reserve price the property is announced as ‘on the market’ and is going to be sold at that auction.

Passed-In

If a property is not sold at auction because the owner’s reserve price has not been reached, it is passed in.

Reserve Price

The reserve price is the minimum price the seller will accept for their property at the auction. This is kept confidential between the seller, listing agent and auctioneer.

Trust Account

A legislatively required bank account where monies are held by an agent for or on behalf of another person e.g. deposits, rental etc.

Valuation Report

A document that records the instructions for the assignment, the purpose and basis of the valuation, and the results of the analysis that led to the opinion of value. A Valuation Report may also explain the analytical processes undertaken in carrying out the valuation, and present meaningful information used in the analysis. Valuation Reports can be either oral or written. The type, content and length of a report vary according to the intended user, legal requirements, the property type, and the nature and complexity of the assignment. The terms, Valuation Certificate and Valuation Report, are sometimes used interchangeably.

Vendor Bid

A type of bid at an auction which is made by the auctioneer on behalf of the vendor and clearly dis- closed as either a Seller or Vendor bid.

CONCLUDING POINTS

  CONCLUDING POINTS
  • There is no cooling off period when buying at Auction.

  • Ensure you have your finance arranged prior to the Auction. Know your limits.

  • Always speak to the Listing Agent about the deposit required at least a week before the Auction.

  • Consider obtaining a Pest and Building inspection prior to the Auction as a standard contract does not allow a sale to be subject to a Pest and Building inspection.

  • Only bid within your means but bid strongly and confidently.

  • If the property is passed in, the property is then on the open market and the highest bidder does not have first right to buy the property.

  • You have the best chance to buy the property for the best price at Auction as the terms and conditions are favourable to the seller, therefore it has been shown they are more likely to accept a sales figure on the basis of the terms.

  • If the property is passed in you are able to make an offer with conditions on it; however, you need to act quickly as typically, the ideal time to submit conditional offers is immediately after the Auction has concluded.

  • The Auctioneers decision is final in all matters relating to the Auction.

  • Make sure yourself and any other decision maker is available for the Auction and only rely on the judgement of yourselves. Do not allow other parties who are not purchasing the property to distract or influence your decision.

  • If you are not sure about anything, ask your Marketing Agent or the Auctioneer, as they are there to help.

 

Realbid                    

About Realbid


Realbid has been created to empower property seekers with the knowledge and understanding of the auction process. Our transparent approach will allow you to bid at auction with confidence and give you the 'auction edge'

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