Real estate agents put properties to auction for two primary reasons. The first is to try to sell the property as quickly as possible. A property for sale at auction that has just been listed on the market involves three weeks of heavy campaigning with the auction taking place in the fourth week.
The second reason a real estate agent puts a property to auction is to try to flush out buyers by putting that four-week deadline on the property, and create a sense of competition to increase the sale price of the property.
Auctions are very common in rising property markets, where there is increased competition and situations where there are multiple buyers for the one property. For this reason, it is critical that at an auction you set a budget beforehand and stick with it. If you are a success at auction and win, you will have to settle the contract even if you can’t afford it. If the property fails to meet the reserve price it is passed in, which means it won’t be sold at auction. The good news is if you were the highest bidder at auction you have the first opportunity to negotiate with the seller.
Auctions in Brisbane are becoming increasingly common.
In Queensland to be eligible to buy at auction, you need to be a registered bidder. In order to register you need to provide the selling real estate agent with a copy of your Australian driver’s licence around 10 – 15 minutes before the auction is set to take place. In some other states like Victoria and Western Australia, there is no requirement for you to make yourself known to the auctioneer before sticking your hand in the air!
The real estate agent will give you a unique bidder’s number (a paddle with a number at the top), which you can hold up during the auction to make an offer to buy the property.
If the property meets the reserve price, and you are the highest bidder at the fall of the auctioneer’s hammer, then you have now bought a property!
When buying at auction there is no cooling-off period, meaning if you buy the property it is final and you cannot get out of it. The cooling-off period also does not apply if you sign a contract on the property within two days of an unsuccessful auction of that property, or after being a registered bidder on the auction. So be careful; if you are unsuccessful at auction but end up signing a contract of sale after you may have waived your cooling-off period!
There are a few terms that you may come across during the auction process. Here’s a quick explanation so you can be confident that you know what you’re talking about if these terms are mentioned:
