Selling Property At Auction: A Guide

Non-traditional real estate strategies, like auctions, can be a beneficial option for both sellers and buyers looking for a quick but effective transaction.

Given today’s competitive real estate market, auctions are becoming an increasingly popular way for homes to be sold. In fact, they account for almost a third of all property sales in Australia.

Preparing for an auction can be an exciting, yet stressful and overwhelming time.

As a seller, you want to make sure you work with a good auctioneer to put yourself in the best position possible to secure a successful sale.

At Calibre we understand that not all properties or sellers are suited to auction, and we work in collaboration with you to choose the best method. 

Here we share some of the basics you need to think about when selling your property at an auction.

The Benefits of Your Property Selling At Auction

You, as the seller, are really in charge when it comes to selling your property at auction.

Some of the benefits you’ll receive when selling at auction are:

Set End date

A set ‘end date’ creates a sense of urgency amongst buyers, enticing them to make a same day decision. This can allow for quick results.

Higher Price Achievable

Competitive bidding between buyers can lead to a sale price over the seller’s expectations (and often beyond the property’s current market value).

Reserve Price Protection

An auction provides you with protection in the form of a reserve price.  This means that your property will not sell unless bidding reaches a pre-agreed level.  Further, there is no ceiling price, so you have the opportunity to achieve a price well above your expectations especially if there is a competitive crowd.

Set Terms

Auctions are suited to situations where the owner wants an unconditional sale (no cooling off at auction) or wishes to set specific terms of sale, such as settlement terms to suit the vendor.

Auction Terms Explained

If you’re new to the world of home auctions, you’ll probably come across a few terms that you’re unfamiliar with.

At Calibre, we will offer guidance along the way, but to get you started, here are some of the most common auction terms and their meanings.

Bidder’s guideThis is a document provided to bidders by the real estate agent before the auction. It outlines how to register for the auction, what documents need to be filled out and the relevant privacy laws, rule and regulations relating to the auction.

InspectionThe pre-auction inspection usually starts around half an hour before the auction begins and gives prospective bidders the chance to take a final look at the property as well as review the sale contract, including the terms of settlement.

Dummy bidThis refers to a false bid made by a non-genuine buyer. All dummy bids are illegal and attract significant penalties for the seller, the dummy bidder, and, in some cases, the agent.

Vendor bidVendor bids are made by the auctioneer on behalf of the seller to help the property reach its reserve price. Depending on the state or territory, an auctioneer is entitled to bid once on behalf of the seller, or as many times as they like. The plans for a vendor bid or bids must be outlined in the rules displayed before the auction begins, and the auctioneer should announce the intention to make a vendor bid at the start of the auction.

Rises and advancesThis is the amount by which bids increase during an auction and is usually determined by the auctioneer. A bidder doesn’t have to follow these rules, but the auctioneer can reject a bid if they think it hasn’t advanced the price enough.

ReserveThe reserve is the price at which the property is considered “on the market” and a winning bid over this price is binding. If bidding doesn’t reach the reserve price, a negotiation between the seller and the highest bidder may take place.

Passed inA property is passed in when the bidding doesn’t reach the seller’s reserve. In most states, if this happens the person who placed the highest bid during the auction has the first right to negotiate a sale price with the seller.
103 Alexandra Street, Bardon

On Auction Day

On auction day, the agent will display documentation around the property at least 30 minutes prior to the scheduled start time.

Before the auction starts, the auctioneer will:

  • read out all the state and federal laws that apply to property auctions, as well as any rules for that specific auction. Though laws differ across Australia, buyers in QLD need to legally register with auctioneers before making a bid
  • disclose if vendor bids will be used

Then, the auction will start by the auctioneer asking for an opening bid. The buyers will then begin to offer.

You will work with the auctioneer to set the increments for bids to rise (normally these start in $5,000 or $10,000 increments) — buyers can propose different amounts and the auctioneer can choose whether or not to accept these bids.

If a property reaches reserve price during the auction, any bid that’s made from that point onwards means ownership of the property.

If the property doesn’t reach its reserve price, the auctioneer may pause the auction to ask you if you want to lower the price or if you’re happy for the property to be passed in.

If you accept the price, there are no more bids.

The auctioneer finishes the auction by announcing: “going once…going twice…going three times…sold!”

What Happens Once The Auction Is Over?

If The Property Sells

Once the property has been sold, the buyer is legally required to pay a deposit on-site (usually around 10%) by personal or bank cheque.

You and the buyer will need to sign contracts and agree on a settlement day where the remaining balance of the property is paid. This period is normally 30, 60, or 90 days after the auction ends.

If The Property Is passed In

You don’t need to accept the sale if the bidding didn’t reach your reserve price.

You can choose for the property to be ‘passed in’, which means that the highest bidder gets an exclusive opportunity to negotiate a sale price with the vendor.

If both parties agree on an amount on the day, then the process follows the same as if the property was successfully sold during auction. If the offer isn’t accepted, you can also open the floor up for other buyers to negotiate, or choose to relist the property on the market.

Let Us Help

The home auction process can be stressful, both as a seller and a buyer, but it can also be a rewarding experience, especially if the property is sold.

With the right preparation and planning in place, you can make sure that auction day goes smoothly for everyone involved.

Our team is committed to helping you get the best price for your property, whether selling at auction or by private treaty.

Let us share our expertise.

Call us on 07 3367 3411.

191 Musgrave Road,
Red Hill QLD 4059

07 3367 3411