If you want to sell a property in Australia, you can generally do one of two things. You can choose to sell by private agreement or choose the property auction route. The private agreement is selling a property for a set price that buyers can essentially say yes or no to. On the other hand, an auction is aimed at getting the best price.
In a hot market or a high-demand area, auctions are common – it’s a good way to get people to bid against each other, which drives up the price. However, if you want to go to an auction, you need to get plan carefully. Each state has its own rules and regulations when it comes to auctions, but here’s some of the generic information to help you get started.
Australia has regulations that apply across every state and territory.
- Auction sales do not include a cooling-off period.
- You cannot use dummy bids to increase the price – this is illegal.
- The property is officially on the market when the reserve price is met.
- If the property fails to reach its reserve price, the highest bidder has the first opportunity to negotiate.
- Buyers must be aware of vendor bids.
- On completion of an auction sale, deposits should be immediately paid and contracts signed.
Inspect & Research
You need to get a realistic view of the property and its value before you go to auction. It’s important that you make the right decision, whether that is a private treaty sale or auction.
Marketing generally starts six weeks before the auction. It’s an effective way to create buzz, and your estate agent will advertise your home in real estate magazines, property websites, personal invitations, local newspapers, social media, and even community notice boards. Part of this process will require you to open your home for viewing, this is usually with several open home events so you aren’t entertaining a constant stream of viewers as you would in a private treaty sale.
An auction sale is not contingent on financing, reports, and legal checks as with private treaty sales. Buyers are responsible for handling the pre-work and once a winning bid has been accepted, it is a legally binding sale.
How It Works
On auction day, your estate agent will display a copy of the potential contract in the auction house. It will provide all the details, encumbrances, and caveats applicable to the potential transaction. Buyers cannot bid until they complete the registration process and receive an ID and numbered bidding paddle.
Bidding will begin and once a bid meets the reserve price, your property is officially on the market. The reserve price is confidential – it is a number that the property owner and estate agent know, and this will be provided to the auctioneer just before the bidding begins.
When this price is met, the auctioneer will announce that the property is now on the market. At this point, there may be a pause in bidding to allow negotiation. The auctioneer will formally end the auction once a successful bid has been placed and that bidder must immediately pay a 10% deposit. Remember, bids are unconditional in property auctions – it is a legally binding bid and there is no cooling-off period.
Going to auction is an effective way to drive the sale price up but you should enlist the services of an experienced estate agent to ensure you get the best outcome.