A friend of mine recently came to me with a real estate-related conundrum. She had fallen in love. Hard. Yes, that quaint two bed, two-bath fixer-upper had really done a number on her. Typical of any love affair though, there was just one catch…it was going up for auction. Having done no more than flirt with the idea of buying a property in the past, and having never even been to an auction, the idea of it was leaving her feeling awfully nervous.
I pondered a variety of methods to explain the process in lay terms. Interestingly, the parallels of an auction and speed dating suddenly became very apparent to me:
- It all happens so fast;
- It’s more competitive than Team Jolie-Pitt vs Team Aniston;
- It can be emotionally straining;
- And lastly – there’s the chance you won’t be going home with one to call your very own.
Yes, in less than 15 minutes you can lay all your cards on the table alongside 10 fellow daters/bidders all vying for the same prize. The thought is enough to frighten even the most confident of daters – I mean bidders.
But when it comes to buying your dream home, surely you wouldn’t let your nerves get in the way? I certainly hope not. So with auction becoming an increasingly popular method of sale in Queensland, it’s important we all understand how they work.
In light of this, we’ve put together a few handy tips for the first-timer on game day:
- Be prepared! When you buy a property at auction there is no cooling-off period and is unconditional, unlike a private treaty. This means you should have your building and pest, finance, additional searches and any other variations to the terms of the contract all sorted prior to auction day;
- When you arrive You will be asked to register – this is a legal requirement in Queensland. Your driver’s licence or passport will do the trick. Don’t forget to bring it along;
- Hammer-time Ok, the auction has commenced. The auctioneer may choose to bid on behalf of the seller. If they do so, they will make it very clear to you it is a vendor bid. The auctioneer may also say the property “is now on the market” – I thought it had been on the market for four weeks, you say! In fact, they are referring to the bidding having reached the reserve price. They may use other colloquial terms like “we’re now playing for keeps”. If you’re confused, or just want to clarify, there’s nothing stopping you from asking the auctioneer;
- Post-auction Well folks, it could be congratulations or commiserations. If you were the highest bidder, you will be signing the contract of sale, the auction terms and conditions and the deposit will be payable upon the fall of the hammer. Alternatively, the property may have been passed in. In most cases this is due to the bidding not reaching the reserve price set by the seller. In this case, everyone has the chance to submit another offer post-auction.
I’ve heard them referred to as “a tennis match gone wrong” however auctions have their benefits – both for the buyer and the seller. For the buyer, it is a transparent negotiation so you know who your competition is. And for the seller, it creates a sense of urgency around a sale that is unique to the auction process.
My final piece of advice to my friend was to attend an REIQ accredited agency’s auction and watch it unfold so she could familiarise herself with the process. And I’m happy to report she is now in a committed relationship with her brand new home.
By Amanda Haack, Deputy Editor, REIQ Journal