The Auction Process(1)
The benefits offered to both buyers and sellers have made real estate auctions arguably the most popular way of marketing and selling property in Australia.
Buyers are invited to bid, or submit offers, on a property. The reserve price is usually set by the seller, with the highest bid at or above the reserve price set by the seller accepted. The auction process gives the seller confidence that the property's true market has been established.
The Auction Process(2)
The purchasers do not know what amount will be accepted and a sense of competition may achieve a higher price.
If the auction process does not produce a sale on the day, it is likely that a sale will result in the period soon after because of the wide advertising exposure and the agent's sales effort.
Because of today's increased and more intensive media and promotional costs, a contribution from the vendor towards those costs may be required.
Some may consider this additional fee a disadvantage but this is not the case, as is proven by the success rate and the prices achieved through the auction system.
If you intend auctioning your home, be sure to choose a member of the Real Estate Institute of Tasmania to act as auctioneer. Their membership gives you confidence in their experience and ability, as well as the knowledge that they follow a code on conduct.
For further information, contact your local member of the Real Estate Institute of Tasmania.
Members are required to abide by a code of ethics and professional standards.
In Tasmania agents tend to be selective in the properties they recommend for auction, rather than auction every house which comes on the market.
Following are some of the main advantages to having your property auctioned:
- An auction provides the most accurate measure of what the market will pay for the property.
- The auction is conducted at a set date and time and draws all potential buyers to the property at the one time. Competitive bidding ensures the property will sell as its realistic market value.
Once the property goes under the 'sold' hammer, it is then finalised. There are no drawn-out negotiations or delays. The auction contract is not subject to any conditions and is an unconditional contract. In effect, it locks in the buyer and there is no 'cooling off' period.
The vendor establishes a reserve price beforehand. A great advantage is that this requires cash buyers, people who have already arranged their finance.