It’s natural that auction day can cause some anxiety. You can minimise stress by understanding the auction procedure. Here’s how the day’s proceedings will unfold:
Before auction day: An auction can happen very fast – so it’s really important you and your agent are clear and agreed on the process of your auction day. Things like your reserve price and whether you will be making vendor bids through your agent are critical and have legal implications. Don’t be afraid to ask questions.
Rules of engagement: At least 30 minutes before the auction, your agent is required by law to display documentation regarding the property. As the auctioneer begins he/she will make an announcement detailing the information: the state laws applying to auctions in general; the rules applying to this particular auction, including whether vendor bids and/or co-owner bids will be used. Auction laws may vary from state to state so discuss the legal requirements with your agent.
Opening bids: The auctioneer will then ask for an opening bid, setting an amount by which all bids must rise, such as in $5,000 increments. Alternative amounts can be bid – such as $1,000 – however it is up to the auctioneer’s discretion if the amount is accepted.
Going once: Once the reserve price has been reached the property is considered to be ‘on the market’ and will be sold to the highest bidder. If the reserve price isn’t reached the auctioneer will privately ask the seller if they wish to sell at a lower price. When the final bid is reached and the seller is happy with the price, the auctioneer will announce “going once, twice, three times…” and if no more bids are offered he will then call, “SOLD”.
Show me the money: An immediate deposit – usually 5-10% of the purchase price – is required after the auction. It’s important to note that being flexible with the length of settlement to suit your buyer can help sell the property. The sale is finalised when the contract has been signed by both seller and buyer and all relevant cheques and transfers have been made. Once this has been completed and the balance of the purchase price paid, the property is officially considered sold.