Online auctions have become commonplace in the Australian property market, with digital tools to facilitate the process accelerating in quality and efficiency in recent times. Today, they are more streamlined, user-friendly, and highly interactive - and an absolute necessity for real estate transactions to continue through periods of lockdown.
Auctions are highly competitive environments, whether in-person or online. Many vendors prefer to sell by auction as they can be extremely rewarding and are one of the most exciting ways to purchase a property. Outside of restrictions, the popularity of online auctions are definitely here to stay. So, for potential home sellers and buyers in this new age of technology, it is essential to understand the process, and how you can leverage this to maximise your sale result.
How can I best prepare for an online auction campaign when selling a property?
1. Understand the process and what it entails
Before diving into anything, it’s important to understand how the online auction process works (or if you’re selling for the first time, what the auction process as a whole entails).
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Your best guide to understanding how an online auction will carry out is through the advice of your trusted and experienced local agent, who can advise you on the best campaign to carry out, answer any of your questions, and also alleviate any concerns you may have.
2. Prepare for an auction like you would for a live on-site auction
This involves preparing your home to present it in the best light possible. While this is crucial for on-site live auctions, there is no reason why you should deviate from standard practice for its virtual counterpart.
You would want to make sure that your home is always ready for show in the lead up to the online auction for inspections - whether in-person or online.
3. Get all your paperwork in order
This is where having an agent manage your sale will come in handy - they will tell you how to handle this exact process. Your solicitor or conveyancer will provide you with a straightforward auction contract.
In this type of market, some amendments may include a longer settlement timeframe. It is also important to find out how a deposit for the sale will be handled with an online auction, as the successful bidder isn’t physically present on the day.
4. Formulate an auction day plan with your agent
On the day, you as the seller and owner of the property aren’t required to do much - all your hard work in preparing the property for sale has been done! Communicate with your agent about what you can do on the day, whether that’s tuning in to watch the auction online, or ensuring you’re in contact with your agent to stay updated on the buyer activity and agreeing on the final price.
It’s important to remember that you should trust the process, and have faith in the marketing campaign that you and your agent have undertaken to get to this point.
How can I best prepare for an online auction campaign when buying a property?
1. Understand the area you’re buying in and do your research
Before even signing up to bid at an online auction, make sure you understand the current market conditions, as well as the local area that you’re buying in. Take a look at the prices of comparative properties in the area, as well as the auction clearance rate. You can also ask a local real estate agent to provide you with some recent comparable sales in the area to fully determine the potential value of the property you’re interested in.
2. Get pre-approved as a buyer
If you’re the successful bidder of a property at an online auction, you are legally required to go through with the purchase if you are the leading bid. Minimise the risk of losing your deposit by having your finance pre-approved before the auction. This is an indication from your bank that you will be successful if you apply for finance (up to a certain amount), conditional on the property you buy.
In a hot seller’s market such as this, being a pre-approved buyer can also put you in front of the competition as it shows that you are a serious applicant.
Then you can go forth and bid with confidence - but remember not to overbid the amount you are pre-approved for!
3. Decide on your bidding strategy
Set yourself a price limit, and make sure you do not exceed that number regardless of what direction the auction takes. Bidding increments generally go up in multiples of $10,000, $15,000 or $1,000, so set your strategy around this. Remember to leave emotion at the door when you’re bidding - and bid confidently!
4. Complete your due diligence
Go into the auction knowing exactly what you’re up for, and that could mean performing building and pest inspections, having electrical or plumbing reports carried out, as well as having a conveyancer or solicitor look over sales contracts.
5. Preparing for auction day
Buyers can register their interest by creating an account on the relevant platform. If you intend to bid, you will need to submit identification and credit card details and be approved by the property’s listing agent.
Once a bidder has been approved by the property’s listing agent, the platform will put a hold on the bidder’s credit card, which could be anywhere between $1,500 and $2,500.
You can watch an online auction and bid on a property using either your computer or mobile phone, and you can bid directly on the platform or app.