Ways to Sell

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Auctions

No matter what you’re selling, you want to maximize your sale price with a minimum of stress and fuss. Raine & Horne Auction Services will help you achieve both.

The auction process harnesses the powers of competition and negotiation. It is considered the fairest method of sale, for both buyers and sellers.

Here we have listed what Raine & Horne Auction Services can do for sellers, the advantages of selling at auction, and some common bidder questions.

For a full explanation of the auction process and legal requirements, please contact your nearest agent.

What your Raine & Horne Auction Services and Marketing Office can do for you.

Ensure 3 auction essentials – excitement, confidence and competition

Successful auctions rely on these three things. Raine & Horne auctions are meticulously planned to ensure yours will have them too. We will carefully devise a specially tailored marketing strategy to ensure your property draws the attention of a strong group of qualified buyers.

Your sale on your terms

You set the day and time of sale, reserve price and terms and conditions and settlement period. You and your agent will arrange inspections at agreed times, allowing you to prepare your asset in advance.

Boost buyer confidence

One of the most important auction day functions is providing information to ensure confident and enthusiastic bidding. If the auction is on site, Raine & Horne gives buyers one last opportunity to have a look around and ask questions.  

Advantages of selling at auction

  • Auctions allow the market to determine a property’s worth. It is regarded as the fairest method for both buyer and seller.

  • Concentrated marketing over a relatively short period attracts a high level of interest. Auctions encourage buyers to get more emotionally involved and attached.

  • Auctions create a sense of urgency. The auction date sets an imaginary deadline, which helps accelerate the selling process. Prospective purchasers must complete their enquiries within a limited time frame.

  • The nature of auction provides for bidding to increase the price. Bidding has no upper limit. In contrast, a private treaty starts with a price that is usually negotiated to a lower price.

  • Sale at auction is conclusive. The property is sold on the fall of the hammer. There is no cooling off period.

  • Properties marketed using the auction process often achieve prices well above vendor expectations.

Advantages of buying at auction

The auction process can be a daunting and emotional experience but being prepared and having a solid strategy will help.

 

  • You get a definite result. Contracts exchanged at auction are unconditional and, once signed, are binding on both parties. This means the vendor can’t gazump you if someone later makes a better offer.

  • It's fast - settlement can occur within a month
  • You don’t spend as much time dealing with agents.
  • You could end up with a bargain.
  • If the property is passed in, you are in a stronger negotiating position.
  • It can be exciting.

Important!
Make sure you have authority to bid
In some states, bidders must register prior to auction. This is to help counter ‘dummy’ bidding, a practice used to artificially raise bids. Check the laws with your real estate agent or the Real Estate Institute in your state.

Handy tips for bidders

1. Do your homework

Have a good idea about the property’s market value. Properties sold at auction are usually subject to a reserve price - the minimum price the vendor will accept. The agent must not disclose the reserve price. For a fee, your lending institution or a registered valuer can give an opinion. Or simply monitor the prices of properties sold recently in the area.

2. Go to auctions

Attend auctions beforehand to familiarise yourself with the way they work. Note any strategies implemented by the winning bidder. This will also give you a realistic insight into the advertised price of properties and the prices they actually sell for.

3. Inspect the property

Visit the property several times to ensure it’s what you really want. Talk to the agent as they will be familiar with the local area. If you are serious about a property, consider having it thoroughly inspected by a licensed building inspector, an architect and a pest inspector before the auction.

4. Get legal advice

If you are seriously interested in a property, you should have your solicitor or conveyancer inspect the ‘Agreement for Sale’, which will be held by the auctioneer. They might suggest making additions or variations to the agreement. These can be negotiated between the solicitors of both parties and, if agreed, the contracts can be amended accordingly.

Check that your copy is an exact copy of the auction contract. Ensure there have been no late changes. Make sure that you have a clear understanding of exactly what is to be included in the sale - all fittings, furniture and any other relevant items should be clearly listed.

5. Be financially prepared

The winning bid at an auction is binding so your finances must be in order before auction day. Contact your lending institution for finance approval so you know how much you can spend. You will need a written loan approval before auction, as well as the deposit, which is usually 10 per cent of the purchase price.

6. Register your intentions

You might be required to register before the auction. You might need to show identification on the day. A driver’s license is usually sufficient. Being registered doesn’t mean you are obliged to bid.

7. Stay calm

Arrive early and find a spot that allows you to read the room and watch other bidders. Having spare time will allow you to do a mental checklist so that you feel fully prepared. Keep your emotions in check. You are making a significant financial investment so don’t get carried away.

If you don’t feel comfortable bidding you can use a professional purchasing agent, friend or family member to bid on your behalf. When using a proxy bidder, make sure you talk to the agent or auctioneer to understand their requirements. Remember, a proxy will bind you to the purchase if their bid is accepted on the day.

8. Be bold

Bid with confidence so that the auctioneer knows you exist. Make sure your bid is realistic so that your interest is taken seriously. Keep in mind that a strong bidder might create a psychological advantage over the competition.

9. Know when to stop

Once bidding has reached your limit and doesn’t look like slowing down, STOP. If you can’t resist, simply walk out of the room. If you weren’t the successful bidder, accept that over-extending yourself is not in your best interests. There will always be other properties

10. Be prepared

When you win at auction, you are required to sign the contract and pay a deposit once the property has been ‘knocked down’ to you. The deposit, usually 10 per cent of the purchase price, will be held in trust until settlement occurs. The next step is organizing insurance to protect your interest in the property. If you require early access to your new property, this can sometimes be arranged via the agent but is not a given right before settlement.

For more information on the auction process and relevant regulations, contact the Department of Fair Trading in your state.

Common bidder questions

What is an auction?

The auction process evolved to ensure property was exchanged at a fair (market at the time) price. The Romans started using auctions in AD 193. The auctioneer first explains the terms and conditions of sale, gives a narrative of the features of the property and then opens the bidding.

What's meant by ‘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. The buyer makes use of comparable sales to help his/her judgement.

What is a reserve price?

The reserve is a price set by the owner after finding out what the market is paying for their style/age of property.  The reserve can be higher than the market at the time but rarely far lower. The auctioneer helps the owner determine the reserve price by providing sales data. The vendor's reserve must not be disclosed to buyers.

Am I able to buy the property privately prior to auction?

Yes. You can buy before, at or after auction, providing the owner accepts your offer terms. Many properties are sold this way.

If I want to bid at an auction, can I do so with an extended settlement date or a deposit lower than 10%?

Yes, providing an arrangement is reached with the auctioneer and owner and you are granted special dispensation.

How do I bid?

Some people find bidding a little nerve racking but it can also be fun and exciting. Relax and take your time. Know what you are prepared to pay. Bid by attracting the auctioneer’s attention. Raise your hand, call out, nod your head etc. Record your bids so you know if the price being called by the auctioneer is your bid. Don't be afraid to ask the auctioneer if you are uncertain.

Will I get one last chance to look at the property?

One of the most important auction day functions is to provide the information needed for confident and enthusiastic bidding. If the auction is on site, Raine & Horne gives buyers one last opportunity to have a look around. They also answer any questions bidders might have.

If the property does not sell at auction and is passed in, what happens next?

If you are the losing bidder (the last bidder) the auctioneer may give you first right to negotiate at the seller’s reserve price. This means you can pay the reserve price and secure the property, proceed to contract and 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 so negotiation is also open to other buyers.

For more information on the auction process and relevant regulations, contact the Department of Fair Trading in your state.

Private Treaty

This method of sale involves the vendor setting the price. It is also known as a private sale.

Prior to setting the price, we will obtain:

1. Specific and detailed information about the features of your property.

2. Computerised market evaluation of comparable properties.

In cooperation with you, we then set the price and immediately start working to sell your property.

Advantages for sellers:

  • The vendor can dictate the pace of the sale.

  • Offers can be considered at your leisure.

  • Some vendors consider private treaty less stressful than auction.

  • Marketing costs can be lower.

  • Prospective buyers not prepared to bid at auction might show more interest.

Advantages for buyers:

  • Private treaty sales can feel less emotional than auctions and don’t require snap decisions.

  • There is less uncertainty around price. You can buy the property for the asking price, maybe even less.

  • There is more room to negotiate favourable terms and conditions. Most states allow a cooling-off period for private treaty sales. There is no cooling-off period with auctions.

  • It’s common practice to get your pest and building inspections done once your offer has been accepted, so you don’t have to pay for any reports until you’ve made an agreement to buy the property. However, this should be done quickly to prevent gazumping.

 Regardless of the method of sale, you can rest assured that Raine & Horne, with its huge network of successful agents and vast experience, will get the job done and exceed your expectations.