Tips to preparing for an online auction
Auctions were once a landscape that required the bidders to attend in person, however, changes over the years have seen a move to more accessible forms of phone and online bidding.
While online bidding may seem like an option to turn up and just raise the e-paddle on the day, there are still some things that you should consider preparing in advance.
Research the Property
Look through the property prior to the auction day to be sure that this is the one that you would like to purchase. If you cannot make it to the open homes in person, speak with the sales agent who may be able to show you via a video walkthrough inspection.
Research the area where the property is located so that you are aware of the location and lifestyle benefits and any features that may not be desirable. Your research is likely to also include any comparable property sales which will help when it comes to determining your price point on auction day.
Arrange finance
Before turning up to any auction, whether it be face to face or online, you should be speaking with your financial lender to gain pre-approval for a loan.
When you make a bid at auction, and it is successful, you are then legally responsible to move forward with the purchase of the property or potentially forfeit any deposit that is required to be paid at the fall of the hammer.
Pre-approval will also give you a limit of where you can bid to so that you are mindful not to bid beyond your means or what the bank will lend during the excitement of the auction.
Prepare for auction day
Ensure that you have carried out all the required checks like pest and building in advance so that you are going into the auction knowing the condition of the property that you are looking to buy.
You can also speak with the sales agent of the property to register you as a bidder for the online auction prior to the auction. This will give you the opportunity to set up your profile and provide the required identification and payment details in advance as well as familiarise yourself with the bidding software prior to the day.
An online auction can be run in one of two ways.
A live-stream auction is where bidders register and log in remotely, using laptops, smartphones or tablets to participate. The bidding process is identical to that of an on-site auction, with only the ‘face-to-face’ element missing.
Bids are submitted through a digital platform and either rejected or accepted by the auctioneer, who controls the auction, suggesting bid increments, accepting or denying bids, and following the rules of a traditional auction.
If a property meets or exceeds the reserve, the property is sold. If not, the auctioneer will call the highest bidder and begin negotiations.
The second form of online auction is much like buying something from a company which uses a bidding process to transact.
Bids are submitted in increments within a given time frame. The deadline can be extended until all bids are exhausted. The successful bidder then conducts a digital exchange through a digital platform to complete the sale.
The two main online platforms used in Australia are Gavl and Auction Now. To participate in an online auction, bidders create an account and provide identification to prove they are a genuine buyer.
After a successful sale, the sale can be finalised through a digital exchange of contracts or through phone-based negotiations.
How can I prepare for an online auction?
Inspect The Property
While in-person inspections aren’t currently permitted in Melbourne, you can arrange a virtual inspection through your agent. If restrictions allow, driving past the property to see its current condition and the local neighbourhood is also a good idea.
Get Your Finance in Order
Buying at auction -whether live or virtual – is a binding financial transaction, so make sure you have your finances in order before you register and bid. If you are the successful bidder, you will be required to pay a deposit on the day. There is no cooling-off period for a property bought at auction.
Do Your Research
Ask for a copy of the contract and the section 32 well before the auction date, so that you are fully informed about the property before you make a bid. Organise a building and pest inspection (if restrictions allow), to get a full picture of the condition of the property.
What are the advantages of online house auction?
Mr Ellis said one of the biggest advantage of an online auction is convenience for remote buyers.
“Bidding can be done from anywhere with an internet connection, making it easier for more buyers to participate. Equally though, weather or local environmental challenges, such as traffic jams, can’t affect the bidding either.”
Ms May said with a virtual auction, the pressure is off for buyers. “The physical distance will allow the buyers to be more rational and also mean no last-minute run through the property before the auction begins!” she said.
Seeing bids on a screen means buyers can “think more clearly”, when compared to hearing them briefly yelled out. Also, as online auctions tend to be slower, it allows buyers to think more clearly, Ms May said.
How are online real estate auctions different from traditional in-person auctions?
Online real estate auctions work the same way as in-person auctions but are conducted virtually. This means no crowds. It is simply the auctioneer and the agent in a room (generally the office or the property), equipped with a camera and a couple of computers to live-stream the auction.
Online auctions provide the safety and comfort of being able to bid from your own home or anywhere you have access to a mobile device. This isn’t a bad trade-off for the “street theatre” and competitive environment that buyers would traditionally have to face.
As the seller, you will be able to log into the virtual auction platform to follow the interactive bidding happening in real-time. Every step of the way, you will know exactly what is going on.
How can buyers register and participate in an online auction?
As soon as a property is listed for sale, the listing should also appear on the online auction platform that will host the event. This is also where buyers must register. They can do this right up until the start of the auction. This is why your real estate agent will advertise this link in your marketing campaign.
To make sure potential buyers are comfortable with the process when auction day comes, your real estate agent will encourage them to register early so they can become familiar with the platform. They should also be encouraged to watch a few auctions prior, so they feel comfortable when bidding.
Is the bidding process the same?
The bidding process is exactly the same, and only the human face-to-face element is removed.
People can bid with confidence from behind the computer screen, very much like you would on eBay. Just like a traditional on-site auction, the auctioneer is ultimately the conductor. He/she can suggest increments to rise by, can accept or deny bids, and ultimately control the direction and the outcome of the auction.
This means that the flow of bids and the process of bidding is still very similar, and buyers can feel increasingly comfortable bidding behind a screen. In fact, for most people, technology has always been an integral part of their lifestyle. This is why they believe that it minimises the pressure that an in-person auction would put on them.
What are the advantages of a virtual property auction?
Online auctions offer great benefits that will guarantee a successful sale.
Because buyers are bidding online from the comfort of their own lounge room, the pressure is usually reduced. It becomes easier for them to stay level-headed and make better decisions. At the same time, they can also consult with advisers that might not have been able to attend the on-site auction with them. This will help attract serious, quality buyers.
In some cases, using an online platform can also encourage more activity due to a fear of missing out. As bidders cannot see and gauge the other buyers, they might be tempted to bid more to try and get ahead of the competition. Buyers will feel the need to bid now before someone else takes their bid and beats them. This will help achieve a higher sale price for your property.
Are online auctions as successful as traditional in-person auctions?
No matter if the auction happens in-person or online, the success of it always comes down to the skills of the agent and auctioneer. This recipe for success will never change.
As an example, LJ Hooker Granville | Guildford recently sold 22 Fowler Road, Merrylands (NSW). This property was auctioned virtually using the Auction Now platform. After 51 bids between 8 registered bidders online and via telephone, it finally sold for $1,251,000, which exceeded the owners’ expectations. The buyer had inspected the property via a virtual tour at 9.30pm the night before the auction.
LJ Hooker Newtown recently sold 156 Denison Street, Newtown (NSW), a 2- bedroom terrace on 89sqm of land, by online auction for a whopping $1,753,000. That’s more than $500,000 over the $1,250,000 median sale price for a 2-bedroom house in Newtown (27 March 2020). There were 3 registered bidders on the property with 21 bids placed on the property.
With this sale, LJ Hooker Newtown established a new record. Indeed, this home was not only the highest 2-bedroom sale in the last three years in Newtown, but also the highest 2-bedroom sale on the street.
This example illustrates how efficient online auctions can be. At first, the owners who were not familiar with the virtual environment were concerned that people would not get emotionally attached to the property. But the sale of their Newtown home proved them wrong. In the end, they were ecstatic with the result and the seamless nature of the online platform. Moreover, they were astonished by the aggressive nature of the bidding.
Selling by auction is widely recognised as a fast and highly efficient method to achieve a premium price for your property. It also gives you much greater control over the selling process, which ensures you retain greater peace of mind. The newest and fastest way to transact property, AuctionNow is an online auction platform enabling buyers to watch, register, bid, buy and exchange on live property auctions on any device from anywhere in the world or simply from their own home. It is a fully secure service that removes barriers to auction, exposing properties to a wider pool of potential buyers in real time. Safe. Secure. Transparent. Reliable.