More homes than ever before are being offered for sale by auction. While that can be a scary thought for some, auctions are actually a great way to buy.
Auctions are transparent
There are no hidden surprises at an auction - you know the terms and the settlement date in advance, you know that you’re bidding unconditionally (neither the buyer or seller can change their mind) and you know exactly who your competition is and what they're willing to offer.
You’ll pay the true market value
At an auction, interested bidders or their representatives openly negotiate the price, so you know you're paying the property’s true market value at that time.
Understanding the bidding process
The auctioneer starts by asking for an opening bid and will then state the amount the bidding can be raised by. For example, there is an opening bid of $500,000. The auctioneer then nominates for the bid to be raised in increments of $10,000. The next person bidding will offer $510,000, and so on.
You can place a bid by simply attracting the attention of the auctioneer - raise your hand, call out your bid or nod your head when you catch the auctioneer's eye.
Once bidding reaches the reserve price, the property is on the market and will sell to the highest bidder. If you're the successful buyer, you must pay a deposit, usually 10% of the purchase price, and sign the contract immediately following the auction. The balance is paid on settlement, which is usually the day you take possession of the property.
Registering your interest
If you are interested in bidding for a property, make sure you understand the Auction Particulars & Conditions of Sale, and formally register your interest. Then if someone makes a pre-auction offer, you will be contacted and have the opportunity to submit your best offer.