No matter what your property is, commercial, land, residential, investment or rural, auction is the fairest way for both parties, the seller and the buyer.
Why? Because there is no prior price disclosed and the market dictates the value at the time. Here are some questions commonly asked by many buyers and the answers to them!
What is the auction?
The auction is a process evolved to exchange property at a fair price (the market at the time), it first happened in AD 193 by the Romans and has continuously been used since then and still is the most effective way to exchange property.
What's meant by the market at the time?
The market is defined as the price obtained when two willing and able parties agree to exchange property at a price accepted by both parties at the time. With the buyer making the use of comparable sales to help his/her judgement.
That's okay but what about this reserve price?
The reserve price is a price set by the owner or owners which they generally have arrived at by market research as to what the market is paying for their (style, type of) property. Sometimes it can be higher than the market at the time but rarely far below. The Auctioneer assists the owner(s) with this figure by providing sales data.
Am I able to buy privately through the agent auctioning the property prior to auction?
Yes, you can, provided the owner(s) accept your offer terms. Quite a large number of properties are sold this way, in fact about 50% in Queensland based on the latest REIQ figures. Auction is a marketing process. You can buy before Auction... at Auction... or after.
If I attend an auction and I wish to bid, can I do so with an extended settlement date or lower than the 10% deposit ?
Yes you can, provided an arrangement is reached with the Auctioneer and owner(s) and special dispensation granted to you.
How do I bid?
Relax and take your time. Set the figure you are prepared to pay for the property. Bid by attracting the attention of the auctioneer. Raise your hand... call out... nodding your head... or some other action that attracts attention. Record your bidding so you know if the price being called by the Auctioneer is your bid or not. Don't be afraid to check (ask) the Auctioneer if it is your bid or not if you are uncertain. Bidding is generally found to be a little nerve racking but can be fun and exciting.
If the property does not sell at auction and is passed in, what is the position?
If you are the losing bidder (the last bidder) the Auctioneer may give you first right to negotiate at the Sellers reserve price. This means you can pay the reserve price and secure the property - proceed to contract - pay your deposit. If you are not willing to pay the reserve, you can still go to contract with your offer and deposit, but remember the property is now on the open market and any other willing buyer will now be able to negotiate with the Sellers Agent.