Selling At Auction
At Auction, buyers bid against each other in a public forum. As the seller, you will set a reserve price prior to auction. This is the minimum amount you will accept for your home.
Benefits Of An Auction
- Buyers bidding against each other can maximise your sale price
- With the emotion on Auction day, buyers can become very competitive
- Provides a final date, enticing buyers to act quickly
- Stronger advertising campaigns to reach buyers
- Allows you to negotiate with the highest bidder if your home is passed in on Auction day
Prior To Auction
Leading up to the Auction day you should have a strong marketing campaign in place to attract as many buyers as possible. Usually an Auction campaign will run for four weeks. Some buyers may try and secure your home prior to Auction day by submitting an offer. You should discuss with your agent whether they feel the offer is in line with the market. If you are happy with the offer, your agent should have the contracts exchanged prior to the Auction date. If your home goes to Auction, you will need to set a reserve price. This is the minimum amount that you will accept as the sale price of your home. The reserve price is set prior to the Auction and is not disclosed.
On Auction day you have the right to place one or more vendor bid(s), as long as the right to bid is noted in the conditions of sale in the contract. When your bid is made the Auctioneer must state that it is a vendor bid. When bidding reaches your reserve price the highest bidder will be committed to purchase your home. If bidding does not reach your reserve price, your home will be “passed in”. The highest bidder will then have first right to negotiate with yourself and your agent.
The successful bidder must sign the contract of sale and pay the deposit at the end of the Auction. There is no cooling off period for homes sold at Auction or within three days before or after the Auction.
Private Treaty is when your home has an asking price and is sold by negotiation
Benefits Of This Method Of Sale Are:
- You are able to reflect on buyers offers
- The buyer doesn’t know what other buyers have offered
- Not as stressful for seller as an Auction
When choosing to sell your home by Private Treaty, buyers will submit offers to your agent. As the seller you may choose to accept the offer or negotiate with the buyer by the way of a counter offer. Your agent will act as a go-between until you reach an agreed price. Should the buyer wish to negotiate changes to the contract of sale such as settlement period, fixture inclusions and cooling off periods, you will need to advise your solicitor so that the contract of sale can be altered to reflect the agreed changes.
Exchange Of Contracts
The exchange of contracts is when you and the buyer each sign a copy of the contract of sale and then physically exchange contracts. This process is completed by your agent, solicitor or conveyance. Upon exchanging contracts they buyer is required to pay a deposit.
The deposit is usually 10% of the purchase price. However, this is open to negotiation and is commonly reduced to 5%.
The deposit is held in a trust account by the agent or solicitor for the mutual benefit of the buyer and seller.
Upon exchange of contracts the buyer usually has a cooling off period of three business days.
The cooling off period allows the buyer to withdraw from the sale. Should the buyer withdraw from the sale you have the right to retain 0.2% of the deposit amount or $500 whichever is greater.
Cooling off periods can also be waived, reduced or extended by negotiation. There is no cooling off period when purchasing at Auction.
Settlement is when the buyer pays the balance of the purchase price and becomes the legal owner of the property.
The settlement period is usually between 30 – 120 days after the signing of the contracts. However, this can be negotiated to meet the buyer and your needs.
Once settlement is completed, your solicitor will contact your agent to advise them to hand over the keys to the buyer.