All About Auction
Updated: Apr 17, 2019
Whether this is your first auction or you are a seasoned pro, it is important to be as prepared.
Familiarise yourself with the whole process by attending a few auctions for properties in your preferred suburb to observe how they work? By understanding how an auction plays out, you will feel more comfortable when it comes time to join the action.
Once you have your eyes set on a specific home, spend a few hours researching the area it is located in to gain a feel for the local market: comparing sales prices of similar houses or units nearby is a good start.
Prior to the auction you will need to ensure that you have carried out sufficient inspections and a 10% deposit should you be the successful bidder.
Most importantly, set yourself a limit then bid with confidence and don't allow rivals to be intimidating - you are just as prepared to win this auction as they are.
The auction bidding process
A successful house or unit purchase at auction involves going through a number of important stages and you'll want to pay particular attention to the bidding process.
If the bidding is slow or has not been initiated the vendor may, through the Auctioneer, choose to submit an opening bid to get the auction under way.
The vendor's reserve price is the minimum amount they are willing to settle for. Once it is reached, the property becomes open to be sold at the auction, while if this level is not reached the property may be passed in and a sale price potentially negotiated afterward.
An accomplished auctioneer will signal clearly that the property is about to be sold by saying, "Once, twice, third and final call, SOLD."
As the successful bidder you will be required to pay a 10% deposit at the fall of the hammer.
Auctions are the ultimate transparent method of buying Real Estate. You the buyer are in control, you are competing with other buyers through "open outcry" i.e., calling out or signalling your bid. It's a simple system of buying and selling and that's why it has survived for over 2000 years.
What is the vendor reserve price?
The "vendor reserve price" indicates the minimum price the vendor is willing to sell the property for.
When bidding has reached the vendor reserve price, the property will be sold at auction. If it does not reach this level, the property may not be sold.
If you are bidding at auction, be aware that negotiations with the highest bidder often begin immediately, so it is essential you are prepared.
What is a vendor bid?
The vendor can make a bid to help move the auction process along - or to help push the property towards the reserve price.
This bid can either made by the vendor themselves or by the auctioneer on their behalf.
The Auckland District Law Society together with the New Zealand Real Estate Institute have a standard form of contract called Particulars and conditions of sale of Real Estate by Auction. The right of the vendor to place a bid is outlined in the Auction conduct section clause 2.5. The Real Estate Institute Auction Code of practice states that should the Auctioneer make a bid on behalf of the vendor he/she must declare such bid to ensure the fairness and transparency of the Auction process . Clause 3.4 (a)