For many would-be sellers, the thought of auction day brings about an overwhelming feeling of anxiety and nerves. The best thing you can do is to be prepared. Knowing how the auction will run and understanding possible outcomes is likely to reduce your stress levels. To help you get in the know, we have outlined a typical auction and what you can expect.
Before the auction
Schedule of Procedures
Your agent should provide you with a detailed schedule of what is likely to happen on auction day. If this is not provided then you should ask him/her to do so. Issues may include: where should I be during the auction, what if no-one bids, what happens if we don’t reach the reserve, should I have my family and friends with me for support?
Attracting a crowd
On the morning of auction day, your selling agent will go to nearby streets and busy roads to place sign boards (also known as ‘A frames’). These are intended to attract passers-by and publicise the auction.
Meeting the agent
You should have met with your agent a day or two prior to auction to finalise most details so the auction day conference will really be a confirmation of that meeting.
In most cases your selling agent will meet you at the property about 45 minutes before the auction is scheduled to commence. During this meeting, you will confirm important information regarding the auction, such as;
– Your reserve price
– How many bidders are anticipated to attend
– How and when you will communicate with the agent during the auction
– Bidding increments
– What happens if the reserve is not met
– How any vendor bids will be used
– Confirm that you or any friends will not be bidding at the auction
Most agents will open the property for inspection at least 30 minutes before the scheduled auction. This allows potential buyers to have a final look at the property, so it is important to ensure that your house is well presented and looking its best. During this time, the agent must display the mandatory rules and information regarding the auction in a prominent location for potential buyers to see for at least 30 minutes prior to the auction commencing.
During the auction
Before the auction gets underway, the auctioneer will provide an introduction of themselves and the agency that they work for.
In accordance with auction rules and laws, there are several mandatory statements that an auctioneer must announce before the auction can commence. Once all legal announcements have been made, the auctioneer will proceed with describing the benefits of purchasing your property. As this is their last chance to engage the crowd and get them excited, they will often provide a detailed description of your property and list the valuable features and benefits.
Bidding at the auction
One the auction preamble is concluded, the auctioneer will call for an opening bid from the crowd. If no opening bids are received, the auctioneer may commence the auction with a vendor bid.
From this point onwards, the auctioneer will control the flow of the bidding. As the bidding continues, the outcome of the auction could be one of two options:
- Your reserve price is met – if this occurs the auctioneer will declare that the property is “on the market”. After the highest bid has been made, the auctioneer will drop their hammer and the property is declared as sold. Once the hammer falls, no more bids can be accepted.
- Your reserve price is not met – if your reserve price is not met, the auctioneer may ‘pass in’ the property. If this is occurs, you are obliged by law to enter into private negotiations with the highest bidder. If you cannot agree on a sale price with the highest bidder, the auctioneer may approach other bidders to try and negotiate a sale. If the property is passed in on a vendor bid, by law any auction report must state this to be the case.
After the auction
Depending on the outcome of the bidding process, you may take either of the following actions after the auction is over;
- Your property has not sold – if the outcome of the auction was that the property did not sell, you will discuss your options with the agent. This may include re-advertising and marketing the property for sale at an agreed price.
- Your property has sold – if your reserve has been met and the property has sold, the auctioneer will invite the purchaser to sign the contract of sale and pay the deposit. Your house will then be sold and the stress of auction day will be over!
Keep out of the way until the purchaser(s) have signed the contract, no matter how pleased you may be. Let the professionals handle all the paper work. Your presence will only delay the sign up process.
Before you sign the contract, confirm with the agent that the deposit has been paid. Once you counter sign the contract an unconditional contract exists between you and the buyer and you may meet with them knowing the sale is complete.