Buying or selling a property through auction can be an exciting and fast-paced process, but it’s also one that requires careful planning and preparation. Auctions offer a unique opportunity for buyers to secure their dream property and for sellers to achieve the best possible price through competitive bidding. However, if you’re new to the world of real estate auctions, navigating the process can feel a little daunting.
In this blog, we’ll break down everything you need to know about property auctions, from how they work and what to expect on auction day, to tips on preparing yourself as a bidder or seller. Whether you’re looking to buy at auction or considering selling your property through this method, understanding the ins and outs of the auction process will ensure you’re ready to make confident decisions.
Auction FAQs
1. What is a property auction?
A property auction is a public sale where prospective buyers bid on a property. The property is sold to the highest bidder, assuming the reserve price is met. Auctions are typically held on-site or online.
2. How do I register for an auction?
You’ll need to register as a bidder before the auction starts. This usually involves providing identification and completing a registration form. On auction day, you’ll be given a bidder’s paddle or number to participate.
3. What is a reserve price?
The reserve price is the minimum price the seller is willing to accept for the property. If bidding doesn’t reach the reserve price, the property may be withdrawn from
auction or negotiated afterward.
4. Do I need to have finance arranged before bidding at an auction?
Yes, it’s crucial to have your finances pre-approved before bidding. If you are the highest bidder and your bid is accepted, you are required to pay a deposit and complete the purchase, so make sure you have your mortgage arranged beforehand.
5. How much deposit do I need if I win the auction?
Typically, you’ll need to pay a 10% deposit on the day of the auction if you are the winning bidder. The balance is usually payable on the settlement date, as agreed
upon in the contract of sale.
6. What happens if the property doesn’t reach the reserve price?
If bidding doesn’t meet the reserve price, the property may be “passed in.” The highest bidder may have the opportunity to negotiate directly with the seller after the
auction, but the property may also go back on the market.
7. Can I make an offer on a property before the auction?
Yes, many sellers will consider pre-auction offers. You can submit an offer to the agent, and if the seller finds it acceptable, the auction may be cancelled, and the
property sold privately.
8. Is the sale at auction legally binding?
Yes, if you win at auction, the sale is legally binding immediately. There is no cooling-off period, and you will be required to sign the contract and pay the deposit
on the spot.
9. What should I do to prepare for an auction?
It’s essential to do your research beforehand. Inspect the property, review the contract of sale, and have your finance pre-approved. You should also attend a few
auctions to familiarize yourself with the process if you are new to auctions.
10. Can I withdraw my bid during the auction?
No, once you make a bid, it is legally binding. You cannot withdraw a bid once it has been placed, so be sure you are comfortable with the amount you are bidding.
