For many Australians, home auctions present a viable opportunity to sell a property quickly. The time limit on price negotiations imbues the process with a sense of urgency, which often makes for much faster home sales than ordinary listings. There may also be a large community of buyers out there who are quite serious about purchasing their own homes. At a house auction, the price is driven up by earnest competition between the serious bidders, and therefore their is potential for the seller to make quite a large profit off the sale.
Their appeal aside, house auctions can sometimes be tricky. Some homes have a better chance of selling quickly, while others may run the risk of “passing in” or not meeting the seller’s desired reserve price. If you’re considering putting your own home up for auction, what should you do to make the experience a smooth, pleasant, and profitable one? What are the things you need to remember before entering into the process?
On behalf of the real estate experts at Gerard Partners, here’s everything you need to know about house auctions in Australia:
There Are Set Rules to Auctioning Homes.
First off, all home auctions in Australia must be conducted by a hired auctioneer or by a real estate agency chosen by the seller. Certain rules apply for all house auctions done in the country, which include the following:
- The property hits the market when the seller’s reserve price, or minimum amount for the winning bid, is reached.
- The highest bidder on the home has the privilege of the first negotiation should the property fail to reach the reserve price.
- It’s illegal to make dummy bids, or bidding to raise the price of the property without genuine interest in actually buying it.
- All vendor bids must be announced to buyers.
- Once the auction concludes, the winning bidder must make a deposit and sign a contract immediately.
Note that some rules are particular to the different states. For example, in Queensland, auctioneers should have auctioneer licences on top of real estate licences, and all bidders must register their information and get their own numbered paddle before the auction. In New South Wales, there are strict laws against under-quoting ahead of auctions. Hefty fines await agents found guilty of lowballing or being vague about price guides.
So before you make any big decisions about a home auction, remember to look up the laws of your state. Your hired real estate agent or auctioneer should be able to get you up to speed.
Sellers Determine the Reserve Price and Marketing Period with Their Real Estate Partners
There’s a lot of planning that goes into a successful house auction, and part of that is determining the right reserve price. You and your realtor can agree upon a good reserve price together, based on information like the bidding strength of potential buyers.
Another part of the process is creating an effective marketing plan. A realtor typically holds on to your property for four to six weeks, and in that time, will market your home aggressively to would-be bidders. Their marketing strategy should involve factors like the property’s location and the unique features that the house comes with. With their advice, you’ll be able to spread the word about the auction and attract serious bidders from your area.
Sellers Can Still Consider Other Offers Before the Auction Takes Place
Some think that there’s no way out of a home auction if you’ve already scheduled one, but that’s simply not true. Sellers can still accept other offers on the home before the auction day. Conversely, buyers can make early offers on the property if they want to skip the fierce competition on the actual bidding day.
In cases like these, the onus falls on the seller. If the seller can reach their preferred outcome before the auction, it is their prerogative to accept it or not.
Auctions Aren’t a Guarantee of a Fast and Profitable Sale
Though a seller can stand to earn a lot out of a home auction, there’s no guarantee that things will go according to plan. For one, bids may be slow to arrive. When this happens, some buyers might think that the home isn’t worth bidding for after all. For another, there may be a large population of would-be bidders in one community, but few in another. Some will find the idea of auctions exciting, while others don’t like the stress or the competitive atmosphere. Depending on where you are and what your community’s like, it may be hard to tell the temperament of your potential bidders.
Your success at a home auction will depend on how well you read the room, plus how effective your auctioneer’s strategies are. Again, this demonstrates the value of strategic planning.
In summary, if you are interested in taking this path to sell your home, you’ll need to do the following:
- First, agree on a reserve price.
- Second, know which features of your home to showcase to bidders in order to gain their interest, and be ready to execute a marketing plan.
- Third, remember that your ideal scenario may not necessarily play out during the auction. As such, be ready to accept all the outcomes that are possible from your home sale.
A company like Gerard Partners can help you achieve the best possible outcome on your home auction in Australia. For proof of the good work we do, read these testimonials from our happiest clients.
Contact Gerard Partners today to get some expert real estate advice. You won’t regret entrusting us with your home auction proceedings!