What to do next if you don't win a property at auction
Auctions are scary.
Hundreds of thousands, or many millions, of hard-earned cash being splashed, in an emotional contest of wealth and wits, on the side of the road, every weekend.
Strategy is important, because buyers may attend an auction only once or twice in their lives.
October’s 61 per cent clearance rate for the combined capital cities was further evidence of an improving collegiate nature between buyers and sellers.
However, it means that a significant portion of homes slated for auction – more than 1800 across the month – did not sell.
Ideally, the property sells under the hammer to the highest bidder. But in instances where the reserve is not reached, and a vendor bid is necessary, a different scenario will play out.
Here is what to do if the auctioneer does not throw down the gavel in your favour.
Be the last one standing
If the reserve price is not achieved during the auction, the highest bidder has the right – the only right – to come inside and haggle with the vendor and the agent.
Other bidders may only put their offers forward if the negotiations between the highest bidder and the seller fail to reach an agreement.
If the property is passed in on a vendor bid – that is, the agent put in a bid on behalf of the vendor, and no other bids from the crowd were thrown forward – the negotiation process is open to any would-be buyers in attendance.
Another phrase for this process is to “withdraw” the property from auction.
If you are the underbidder
If you are unlucky enough to be second or third in line, you will have to wait for the highest bidder to see through the process.
If their negotiations fall over, then you may make an offer.
The trick is – don’t leave the auction in a huff if you were not the highest bidder. No tantrums! If you are serious, hang around and be patient. You might get your chance.
No sale. Now what?
If no bidders are able to reach a price agreement with the vendor, the common next step is for the property to be offered back to the market as a private sale.
Private sales involve old-fashioned roundtable negotiation, and this is where you want to have an agent good at auctions but also skilled at this sort of engagement.
Participating in the negotiation process, immediately after the auction, can provide some knowledge of the price sensitivities and where the vendor’s soft and hard points are.
Under consumer law, if the agent advertises the property after the auction at the amount it was passed in on, they must disclose if it was a vendor bid.
Properties open for inspection this weekend around Australia
16 Carey Parade, Tamborine Mountain, QLD
232 Myers Street, Geelong, VIC
8 Dunbar Avenue, Lower Mitcham, SA
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