South Australia’s property market is experiencing demand not seen for more than a decade, according to OC Managing Director Alex Ouwens.
The combined forces of record low-interest rates, the return of ex-pats to SA because of COVID and the changing work from home lifestyles has seen demand skyrocket in the past 6 months.
THE RISE OF AUCTIONS
An auction campaign is most effective in a competitive market where there is a lot of buyer interest. Currently, we are experiencing significant activity in the market where properties are selling for up to 20% more than expected and with high numbers of registered bidders, meaning the conditions are perfect for an auction campaign.
WHAT IS AN AUCTION CAMPAIGN & WHAT DOES IT INVOLVE?
An auction of your property is held at a particular place on a specific day and time – generally at the property itself. Buyers assemble to bid on your property while a licensed auctioneer will conduct the auction based on strict regulations governed by the state.
The very nature of an auction creates excitement and competition, often spurring buyers to bid higher than they might have otherwise, which gives you a higher chance of achieving a reasonable price on your property. When the bids reach your reserve price at the auction, the property will be sold to the highest bidder.
Purchasing a property at auction can seem a little scary. The notion of bidding against another interested party can definitely be overwhelming, which is why we’ve compiled a list of the most common questions we at OC get asked from purchasers in the lead up to an auction.
HOW IS BUYING AT AUCTION DIFFERENT?
When you buy at auction the purchase contract is unconditional, which means it cannot be “Subject to Finance” or “Subject to Building Inspection”. This doesn’t mean you can’t borrow money to complete the purchase or get a building inspection done, you just need to be a bit more prepared.
WHEN DO I ARRANGE A BUILDING & PEST INSPECTION?
If you’re planning to bid on a property, it’s advisable to arrange a building & pest inspection in the lead up to the auction day so that you know everything you can about the property if you’re the successful purchaser. If you don’t have a building & pest inspector, you can arrange an inspection using the “Building & Pest Inspection” button on the property listing on the Ouwens Casserly website.
HOW DO I BUY AT AUCTION WITH FINANCE INVOLVED?
While it’s extremely rare to have unconditional finance approval before auction day, this doesn’t mean you can’t bid with confidence. Many bigger banks these days won’t fully assess pre-approval applications as a time & resource saving measure, but with the help of a detailed & thorough mortgage broker, you should be able to arrange a fully assessed pre-approval prior to the auction, which will then put you in a position where you know exactly what your budget looks like on the day. If you don’t have a relationship with an existing mortgage broker, our broking partners at Fresh Home Loans are experts in preparing buyers to purchase at auction.
DO I NEED TO REGISTER TO BID AT AN AUCTION?
Yes. You must register by providing your name, address, contact phone number and proof of identity. All Ouwens Casserly properties have bidder registration forms available prior to and on auction day.
DO I REQUIRE A BIDDING NUMBER TO BID?
Yes. Once registered to bid you will be provided with your bidding number which identifies you as a bidder at the auction.
WILL THE AUCTIONEER ANNOUNCE WHEN THE RESERVE PRICE IS REACHED?
No. The reserve price is a confidential amount and will not be disclosed.
WILL THE AUCTIONEER USE VENDOR BIDS?
If the bidding is competitive with multiple bidders, the auctioneer may not use vendor bids at all. However, if no one opens the bidding, the auctioneer may exercise their right to bid on behalf of the vendor and these bids will be identified as vendor bids, ensuring total transparency.
HOW MANY VENDOR BIDS CAN AN AUCTIONEER MAKE?
Depending on the competition, the auctioneer has the right to exercise up to three vendor bids to encourage bidding into the selling range.
IF I AM THE ONLY REGISTERED BIDDER, WHY SHOULD I BID?
If the auctioneer has stated that the highest bidder shall have the first right to negotiate, at either the reserve or amended reserve, as the highest bidder you will secure the first right to negotiate with the vendor prior to the agent entering into any negotiations with any other interested parties. It is imperative that you bid to take advantage of this negotiation position, otherwise you could be just one of several interested parties attempting to negotiate after the auction.
WILL THE AUCTIONEER ANNOUNCE THE PROPERTY IS ON THE MARKET AND GOING TO BE SOLD?
Not necessarily. If you intend to hold back from bidding in anticipation for this announcement, you run the risk of losing the property as the auctioneer has no legal obligation to make this announcement. If you wish to purchase the property, you must bid.
WILL THE AUCTIONEER HAVE A MID-AUCTION CONFERENCE WITH THE VENDOR?
Possibly. Depending on the activity of the auction and vendor instructions, the auctioneer may simply call three times and sell to the highest bidder without any further reference to the vendor.
DO COOLING-OFF RIGHTS APPLY AT AUCTION?
No. You will be required to sign an unconditional contract and no cooling off period will apply.
DO I HAVE AN INSURABLE RISK FROM THE FALL OF THE HAMMER?
Yes. If you are the successful purchaser, we strongly advise you to organise insurance pre-empting your purchase of the property – you have an equitable interest in the property from the fall of the hammer.
WHAT DO I NEED TO DO AFTER PURCHASING THE PROPERTY?
You will need to immediately sign the contract and pay a deposit of 10% of the purchase price unless the vendor has accepted other deposit terms prior to the auction commencing.
WANT TO KNOW MORE?
Looking to take advantage of the current market boom?
Request an appraisal with one of our agents >> CLICK HERE
Want to know more about buying at auction?
Download our Auction Bidders guide >> CLICK HERE
MAKE IT HAPPEN™
Alex Ouwens and Nathan Casserly have a genuine passion for real estate and love to help people achieve their goals and dreams through Property. Find out more about OC here.
Interested in a career at Ouwens Casserly Real Estate? Check out our opportunities here.