It’s natural to feel anxious on auction day. However, it would help you feel less stressed by knowing how the auction process works.
How will the day’s proceedings unfold in it’s simplistic form?
Prior to auction day: It could take just a few quick minutes to conduct an auction, so make sure you and your agent are clear and agree on the whole process. Don’t hesitate to ask questions.
Rules of engagement: Your agent is bound by law to show documentation regarding the property 30 minutes prior to the start of auction. At the start of auction, the auctioneer will state the laws governing auctions in general and the laws governing this particular auction. Auction regulations may differ from state to state so ask your agent about the legal requirements in your location.
Opening bids: The auctioneer will call for an opening bid, establishing a sum by which all bids must increase, for example $5,000 increments. Other amounts can be bid, like $1000. However, it is up to the auctioneer whether to accept or reject the bid. All bids are recorded.
Winning bid: When the reserve price has been achieved, the property is deemed to be ‘on the market’ and will go to the highest bidder. This may or may not be announced by the auctioneer. If the reserved price is not achieved, the seller will be asked privately by the auctioneer if they’d accept a lower price. After the closing bid is achieved and the seller is satisfied with the price, the auctioneer will say “going once, twice, three times…” and if there are no more bids, will announce “SOLD”.
Paying up: After the auction, the winning bidder, is required to pay an immediate deposit – normally 10% of the purchase price. The rest is paid at settlement day, typically 28 days later. Here’s an important tip: setting your settlement to suit your buyer can help sell the property. The sale is complete once seller and buyer have signed the contract and the deposit has been taken and receipted. The property is officially sold when all these have been completed and the sold sticker is then added to the signboard.