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Auction Bidding Service by Experienced Buyers Agents

Wise Real Estate Advice - Buyer Agents Melbourne > Auction Bidding Service by Experienced Buyers Agents

You have been house hunting for months and have finally found the house that matches all your criteria.

Price seems good, your fridge fits in the kitchen and you have a list of home improvement visions to make the home perfect.

You decide to proceed with the purchase and discover that the property is scheduled for auction in a few weeks.

The price they’re putting out there looks pretty good, actually better than what you’ve seen at other auctions.

So what steps should you take from this point forward?

Firstly, a few points every buyer must know about an auction:

Auction buying is unconditional. This means if you win the auction, you have to commit to buying.

No cooling off allowed, no building or pest inspection & no subject to finance clauses.

In other words, buyer beware: if a house has structural defects, unpaid rates or a property dispute with neighbours, this is all inherited when you purchase.

Ensure you complete a building and pest inspection, have your contracts reviewed by a conveyancer, and obtain finance pre-approval.

Understanding market value.

On auction day, successful bidders must pay a deposit, normally this is 10% of the purchase price. Once paid this figure is non-refundable.

Were you aware that if you pay more than the property’s market value, the bank might dispute the valuation and not provide the correct amount of finance?

Consequently, if you encounter finance issues and are unable to complete the property settlement, forfeiting your deposit is a standard practice under Australian law.

To navigate potential financial issues and ensure that the correct amount of funds is secured, successful auction bidders need a comprehensive understanding of a property’s market value.

Otherwise, the responsibility falls on the buyer to bridge the financial gap if the bank does not provide the accurate amount of funds.

Why real estate agents love auctions.

If all goes to plan, an auction campaign should only take 4 weeks to sell a house. This puts pressure on buyers and sellers to confirm to a time frame.

Most importantly, real estate agents require minimal effort to align buyers and sellers on price, hence why most auction properties are under quoted.

Did you know an auction model is designed to return maximum dollars to the pocket of the seller?

It puts buyers under unnatural pressure in front of competing parties where only experienced property buyers know how to avoid the pitfalls and come out on top.

Common traps that buyers often fall into include:

Auctions are designed to create uncertainty, excitement and tension in buyers. This heavy mix of emotions serves to push bidders to extend themselves beyond their price ceilings and what they logically know to be reasonable.

Prices are usually underquoted: All too often, potential buyers are offered price estimates that fall notably short of the final sale price, in order to ensure that as many interested (and emotionally attached) parties at the auction as possible.

Lack of preparation and research. You are almost certain to underachieve in this market without studying comparable local sales, acquiring the proper inspection reports and having a reasonable understanding of the current market dynamics.

How buyers agents assist you?

Buyers agents are experienced real estate agents that have sold hundreds of homes prior to becoming buyers agents.

The know the ins and outs of bidding at auction, negotiating when an auction closes and most importantly when to walk away if things get too heated.

Our Melbourne based Buyers Agents will spare you the stress, uncertainty and emotional attachment which is associated with any auction process.

We will be your own personal representative at property auctions to enter bidding on your behalf and relentlessly try to secure the property of your choice at the lowest possible price – whilst remaining strictly within your budget.

Buyer’s agents minimize your exposure to risks.

Dummy bids: We have talked to auctioneers in the past and “encouraged them” to stop running the bids up and on several occasions identified bidders to prevented dummy bids from pushing up the price on our client.

Post Auction Negotiations: We have let properties pass in at auction and entered into post-auction negotiations straight after and bought below the pass-in figure.

Listen to our podcast on Auction bidding.

Listen to "Negotiating A Property Purchase" on Spreaker.

Real Estate agents and under quoting: We have saved countless clients from wasting their time and money getting building and pest inspections and paying us to attend auctions where the property was drastically underquoted. In every case these properties sold for well above our potential clients’ financial capacity.

Non emotional bidding: an advocate understands market value, in other words knowing a good market purchase for the property there bidding on. With current conditions most properties over exceed previous market prices and it takes real estate exprience in knowing when to walk away.

Negotiating After Auction.

What happens if a property doesn’t sell at auction and gets passed in?

This is a scenario that a buyer’s agent actually prefers to work in because it creates the opportunity for negotiating directly with the real estate agent with no other bidding competition potentially upsetting or disrupting a negotiation.

Prior to attending auction, a buyer’s agent will have done his homework. He would have inspected the property at large as well as a number of comparable properties in the area.

Next, he would compare this to homes that have sold in the last 3 to 6 months. This helps to design an auction bidding plan.

Come auction day, an experienced buyer’s agent would capitalise on a failing auction.

Typically, either by bidding before an auction closes or approaching the agent directly after the auction to enter into a private negotiation.

This is where a buyer’s agents’ experience and homework on a property tie in together to win their clients a great deal.

For more information on this topic, check out our page on ‘Negotiating after auction.’

Have a chat with a professional auction bidder today.

Submit your details on our contact for for an obligation free phone call can help you understand how an auction bidder can secure your home and minimise the risk involved in buying property at auction.

In most cases, a good buyers agent will save you enough money to at least cover the fee of hiring a buyers agent and manage the whole process on your behalf.

Auction FAQ’s:

When is the property sold at auction?

The sale takes place at the time the successful bidder signs a legally binding contract and pays a negotiated deposit for the property. This is known as ‘Exchange of contracts.’

Do I have to pay 10% deposit on the day?

There is no law stating that a 10% deposit is required. Rather, a negotiated amount between the seller and buyer. Property law does state that a deposit must be something of value, usually currency but could be anything the seller accepts, for instance, an expensive watch, a car or painting.

Can I submit an offer prior to auction?

This is usually up to the seller and their representative the real estate agent. There is a great change of a private negotiation if the auction campaign has been slow. Hence a high chance of a pre-auction offer being accepted.

A buyer’s agent prefers to operate in this type of scenario as it favours their clients offer by reducing the competition – otherwise known as a private negotiation.

What is the price of the property if it’s selling at an auction?

This issue is one of the biggest problems in real estate and unfortunately real estate agents leverage this advantage.

Why is it so hard to set a price? No two properties are the same hence their price can vary. Sometimes a little but most of the times, a lot. Factors like school zones, land size, quality of interior finishing and size of floor plan need to be taken into consideration.

In 2017 the state government made efforts to establish laws and stop agents from underquoting, it’s still very common for properties to sell well above their quoted price. More information on under quoting.

At Wise Real Estate Advice, our buyer’s agents give clients a detailed market appraisal based on similar sales that have been made within the last 6 months. The price will factor in the market value and what the property should sell for under certain auction conditions.

Auction lingo confuses me, what do they mean?

“I will only accept rises of $20,000 or larger” typically means that there is a long way to go before reaching the property’s reserve.

“First call…Second call” If this is called before meeting a reserve then the auctioneer is often trying to induce more bids after a slow period. If said after reaching the reserve, it’s go time- bid now or forever hold your peace.

“Ladies and gentleman, please wait here for a moment while I refer the bid” often means that bidding has slowed and the reserve is a long way off. The auctioneer will try to explain the situation and ask the vendor to lower their reserve.

“We are playing for keeps” typically signals the reserve has been met and the house will sell to the highest bidder.

“Vendor bid” is used as an offer from the vendor. Vendor bids are used at the start of an auction if no other offers are presented, or after a slow down to rebuild interest.

“I’m confident the property will sell at auction today” usually means one of two things. Either the reserve has been met, or a lucrative offer has been presented before the auction with the potential buyers in attendance.

“Last chance” The house will be passed in if the reserve hasn’t been met, or will sell if it has.

“I will accept raises of $1000” bidding has slowed and the reserve has been met or isn’t far off.

“There’s real value here” Interest is low and the auctioneer needs to induce bids.

“This property will be sold today”, a regularly used ploy to try and create bids when a reserve has not been met; however, it could also mean that the reserve has been and that the house is on the market.

Is there cooling off, building inspection or subject to finance clauses allowed at auctions?

The reason why sellers and real estate agents love auctions is because the result is final, in other words ‘unconditional’. This means the responsibility falls on the buyer if:

The property is faulty. It is up to the buyer to organise a building inspection prior to the auction date.
If you have over-paid for the property and the bank will not offer you finance. It’s wise to have an unconditional bank pre-approval.
If you change your mind, winning an action means you have purchased the property, no cooling off period applies.

If for whatever reason you choose to not proceed with the sale, at minimum you will lose your initial deposit. The worst-case-scenario would be the seller suing you for further loss or damages.

How many vendor bids can an auctioneer make?

An auctioneer can make as many bids as they seem necessary to push buyers above the vendor’s disclosed reserve price. At Wise Real Estate Advice, our buyer’s agents frequently negotiate below a vendor bid if it’s deemed to be unreasonable.

Do I have to pay the real estate agent if I win the auction?

It’s illegal for a real estate agent to accept two commissions when selling one property. The real estate agent is paid exclusively by the seller to advertise and sell the property, hence there is no need for a buyer to pay the agent.

If the buyer chooses to engage a professional bidder or buyer’s agent to represent them at action, then the pre-arranged fee is settled upon prior to the auction. More information on buyers agents fees.

Has the seller set a reserve price?

At every property auction in Melbourne, the auctioneer usually takes a pause during a live auction to consult the vendor. This is to discuss if the pre-auction reserve has been satisfied. At this point, if the vendor gives the agent the green light, the property is on the market and the highest bid thereafter will purchase the property.

Do I have to pay 10% deposit on the day?

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