About Auctions
A real estate auction is a public bidding event where a property is sold to the highest bidder, provided the bid meets or exceeds the property's "reserve" price set by the vendor. Auctions are conducted by a real estate agent acting as an auctioneer and are subject to strict rules. The fast-paced nature of auctions, along with the auctioneer's persuasive techniques and competition among buyers, can make the experience quite intense.
Before the Auction
To prepare for an auction, ensure you have:
Finance Approval: Get your finance conditionally or unconditionally approved, including confirmation from your lender on the maximum amount you can borrow.
Deposit Ready: Have enough funds available to pay or transfer the deposit.
Property Inspections: Thoroughly inspect the property and understand its condition by obtaining building, pest, or strata reports.
Contract Review: Review the contract with your solicitor or conveyancer and be comfortable with its terms.
You can negotiate the conditions of the contract of sale, but these negotiations must be finalized before auction day. It'scrucial to understand that there is no cooling-off period or opportunity to change your mind if you're the successful bidder at an auction. For more details on how auctions work, visit NSW Fair Trading.
The Bidding Process
The auction process involves buyers competing to place the highest bid for a property. The auctioneer manages the offers and controls the negotiation process.
Here are key points to understand:
Reserve Price: The seller sets a reserve price before the auction, which is typically not disclosed to bidders. If the reserve price is met and bidding continues, the property will be sold at the auction's conclusion.
Fast-Paced Bidding: Auctions can move quickly with numerous bids being made simultaneously. It’s important to stay alert, track all bids, and only bid within your budget.
Successful Bidding: If you are the highest bidder, you must sign the contract of sale and pay the deposit immediately after the auction.
By understanding these steps and preparing adequately, you can navigate the auction process with confidence.