What about a property auction?

You probably have at least a vague idea of how a real estate auction works.
A lot of people in a room, raising their hands while a person is really talking quickly, right?
Auctions are a popular method of selling for sellers. They are good when it is not entirely clear what a property is worth. This is the case when it is a really unusual place, or market conditions change (prices don’t either up or down) and you can’t be sure what buyers would be willing to pay.
For sellers, auctions are great when there is a lot of competition that pushes the price beyond what these buyers would normally have offered.
Sometimes the spirit of competition manifests itself in people and they continue to bid to win.
But auctions can be very bad for sellers when the market is soft. If you are in a room by yourself and realize that you are the only person considering bidding, you might decide that you are in a stronger negotiating position than you thought.
If you are interested in a property that is going to be auctioned, the first thing to do is to register your interest and inform the seller that you would like to be kept informed appointment.
This means that you will know if the auction is advanced — this it sometimes happens if an offer is made before the auction that the seller would accept. In this situation, they would accept this offer and make it the starting point bid on the auction and hope that someone else would bid it higher.
The seller will also send the legal documents to your lawyer for them to review. This will include the agreement that you will sign if you are the successful bidder, indicating things like the settlement date. You can do modifications to this agreement prior to the auction with what is known as a “modification of the agreement’. The seller will then decide if he wants to accept these conditions if you were the winning bidder.

Attend a few auctions where you don’t plan to bid, so you can see what arrive and be ready.
The biggest difference between auctions and other sales methods is that you need to sort everything out before bidding.
You will need to have completed all the building reports and appraisals that you need, as well as sorting out your finances. That’s because an offer is a unconditional offer. If you win, you must proceed with the purchase.
Sometimes, when a property is put up for auction, the seller will already have prepared a LIM or building inspection report, to help buyers prepare to bid on time.
You can ask your lawyer to help you understand the information you have on the property so that you are ready to bid. If you don’t get a valuation, it’s a good idea to use some of the real estate data sites to determine what the house could be worth. Check if any neighbors have sold recently and see how the place compares.
You will usually pay your deposit the day you win the auction. Make sure your finances are confirmed with your lender before you embark on the auction room – the bank may want to know specific things about the house even if you have a pre-approval to a certain amount.
When it comes time to bid, the auctioneer won’t tell you what the reserve the price is, but they will tell you when the bid reaches it.
Auctions usually take place either at the property that is for sale, in the real real estate agency rooms, or online.
You do not need to be physically in the room to bid on an auction. You can arrange to bid by phone and it is becoming more and more common for auctions to be held virtually too. Sometimes you may need to download an app to bid. You can also appoint someone to bid for you.

On the day of the auction, you may need to register on arrival (or log in online). You will receive a bidder number. Before the start of the auction, the auctioneer will read aloud the terms and conditions of the auction, announce any significant problems with the property, inform the bidders if the seller bids and also indicates if there are registrants online or by phone bidders involved. Auctions will usually start below the reserve price.
An offer from the seller will only be made before a property reaches a reserve, and is designed so that the bid approaches the reserve price. It will be has made it clear to you when an auction is a “supplier auction” so that you understand if you are competing with someone who really wants the property, or the existing owners.
As the auction progresses, the auctioneer will decide how much more each the offer must be higher than the previous one. Like other real estate sellers, the the auctioneer tries to get the highest possible price for the property.
If the bidding stops before the auction reaches the reserve, the sellers the people involved could talk to the seller about reducing their reserve with the aim of get things moving again. And if it does not reach the reserve, the sellers will usually negotiate with the highest bidder to see if he can reach the price on the seller wants.
Sometimes there is a short period after the auction where the rules of the auction keep applying — so if you make an offer the next day and that offer is accepted, for example, you might find that it must be unconditional. But after at this point, other buyers can also put their offers, including offers with conditions that meant they couldn’t bid.
Successful bidders are invited to sign a sales and purchase contract when the auction is over. If you are bidding online, the auctioneer may be able to do this for yourself.