Behind the Scenes of an Auction
There is often a lot of mystery surrounding the auction process, and we at Harcourts CBD thought that it would beneficial for both buyers and vendors alike to get a blow-by-blow explanation of what actually happens on the ‘big day’. There can be a lot of expectation and emotion flying in the air, and we hope to guide you through this with the minimum of fuss or disappointment. Here Iolanthe breaks the whole process down for you with an illustrated guide to an Auction – featuring Iolanthe, Dionne and Lisa at one of their recent campaigns.
Part One: The Open Before the Auction
This is a great time to have a final look around the property – check the cupboards, the view, and if you want to there are always documents on display for you to check through. Auction Rules will be displayed at this time for half an hour prior to the Auction. You might want to discuss settlement times and deposit payable with the auctioneer or agent at this time. At all our opens we provide comparable sales, outgoings and if possible a market overview – all to help make the buying process a more confident one. During this time the vendor is away from the property, and comes by 5 minutes or so prior to the auction being called.
Part Two: The Auction Begins
Just prior to the Auction being called, the auctioneer confirms the vendor’s reserve price. This can change up until the last moment and is 100% the vendor’s decision – it has nothing to do with the agent or the auctioneer.
The Auctioneer then goes out to the crowd, along with their penciller. The penciller here is Lisa, to the left of Iolanthe. A penciller notes down all the bids as they are called and keeps a legal record of the event. They can also assist with pointing out bidders to the auctioneer whilst they are calling.
Part Three: Rules and Regulations
Auctions are highly regulated environments, and a great way to buy – you can genuinely see what the other buyers are prepared to pay for it. It is also a great way to sell, as nothing produces better results than healthy competition.
The Auctioneer must read out the Auction rules which make it clear that if there is any bidding on behalf of the vendor, the auctioneer alone makes that bid known. There is no dummy bidding at auctions, and there are provisions and fines for any parties that bid falsely. So, you needn’t be worried about having the price ‘pumped up’ by fake bidders anymore.
The Auctioneer then also talks about the property – she may discuss the kind of popularity the property has had in the campaign, the benefits and features of the property, a brief overview of the market in that neighbourhood, and the things that the vendor loves the most about their property. This isn’t a particularly interactive part of the proceedings.
Part Four: Off and Running!
The auctioneer will clearly ask for bids from the crowd. Auctions can start off very quietly with a lot of people looking at their shoes! Don’t be surprised if there is a lot of banter from the auctioneer prior to the first bid being made. If you feel nervous making bids by yourself, ask the auctioneer or sales agent prior to get a Harcourts staff member to call our bids on your behalf or help you to decide when is the best time to make your bid.
Oftentimes, bidding starts very low. That is ok – you can start off lower than you would expect to pay. Don’t be embarrassed, no one will judge you. It doesn’t matter where you start – just where you finish!
In the event that there is no ‘natural’ bidding from the crowd, or people are a bit slow starting off and need a little encouragement, the auctioneer will make a vendor bid. She will clearly say ‘I make a vendor bid of … $x’ so you know that she is starting the proceedings off.
Part Five: Bidding Competitively
When you begin bidding the auctioneer will refer to you and ask others to bid against you. The auctioneer decides the ‘rise’ (or the lots going up i.e. $5000 a rise or $10000) as participation increases. Don’t be afraid to bid strongly – decent sized rises often discourage other bidders from pushing ahead. Again, an agent from Harcourts can help you make this call if you require the help.
Here we have an event where bidding has reached a saleable level. The auctioneer decides to have a half-time break and consult with her clients.
Part Six: Consulting the Vendors
The auctioneer will come inside and discuss proceedings with the vendor – ie what bid they are up to and the keys parties bidding. This is a very important feedback session, as the auctioneer will provide immediate and precise decision-making information to the vendor. Based on the auctioneer’s advice, the vendor will either decide to ‘put it on the market’ or continue to hold out and attempt to reach their reserve. To ‘put it on the market’ means that the last bidder will purchase the property if no other party bids above them. When a property is very close to achieving reserve and there is good bidding activity, a vendor will often decide to put the property on the market in the hope to elevate it above their expectations.
Part Seven: Last minute requests
Sometimes a purchaser will come to auction without being fully prepared. In order to bid at auction you must have a deposit cheque available on the day. An auction is not subject to any cooling off or other conditions. This purchaser was unable to continue bidding and missed out. If you want a property and decide to bid, make sure you go to a broker or get the Harcourts Financial Services details and get a pre-approval. Don’t miss out through lack of preparation!
8. Iolanthe calling the most energetic bidding of the auction
Part Eight: Knocking it down
As you can see from the photos above, the auctioneer is working hard – taking bids, keeping the crowd moving and excited. For this property, we had four bidders. This property was not called ‘on the market’, and was instead passed in to the last highest bidder. The privilege of being the last bidder is that you are offered the property at the vendor’s reserve price (in this case around $2000 shy of the last bid). You have the first ‘right of refusal’, which means that you can choose to accept to buy the property without it being offered to any other party first.
9. Lisa and Iolanthe making sure everyone has made their highest bid.
Part 9: Negotiating with buyers
In the event a property is not sold under the hammer, the agent and auctioneer continue negotiating with buyers until an agreeable price is reached and the property is sold! The successful buyer is then taken inside to sign up five copies of the contract and provide the deposit.
Part 10: Sold!
In a well-run auction, all parties should feel that they know what is occurring at all times. Our vendors are given the best regular communication to make great selling decisions, and our buyers are supported in the bidding process and given as much information as we can muster. Don’t be fearful of the auction process – and if you have any concerns just contact Dionne at Harcourts City Residential by phone on 9664 8100, on e-mail by email@example.com, or even leave a comment below!
*Harcourts City Residential has gathered this information to provide an interesting document for apartment owners and prospective purchasers. Harcourts City Residential may not have affected any or all of the transactions noted; rather we’ve gathered as much market information as possible on ALL transactions to be as conclusive as possible.
Information contained herein is gathered from a range of sources including but not limited to; The Age Property Results, The Herald Sun Property Results, Valuer General Information & Agents own investigations. All efforts are made to verify the information provided. The information is not to be relied upon or used in dealings with third parties and people should make their own investigations regarding their own property or personal circumstances. Opinions offered are just that, our opinions & observations and should not be treated as fact.
If your property is exclusively listed with another agent please disregard this communication.