The main reason why home sellers sometimes resort to auctions to sell their properties is because it can lead to a quick sale. Buyers who show up at property auctions typically aren't the sort to take a long time to deliberate on their decisions as they would not bid on a property they have no interest in and the time taken to sell a property through an auction instead of through a real estate agent is considerably shorter.
If you are planning to sell your property through an auction, it would be prudent to familiarise yourself with the formal procedures. Generally, you should be prepared to:
- Provide details of the property you are selling
- Sign an Auction Agreement with the auctioneer
- Pay an administration fee upon signing an Auction Agreement, usually in cheque
- Confirm the reserve price of your property with the auctioneer
- Provide the auctioneer with a copy of your identification card to prove your ownership of the property
- Appoint a solicitor to assist you in preparing the necessary documents
- Arrange for the auctioneer to perform an inspection of your property and take photographs, as well as hold home viewings of your property for prospective buyers
- Pay the auctioneer a commission fee of one per cent upon the sale of your property
Certain aspects of these procedures may vary with auctioneers, especially the administration charges. However, these are general procedures which are common among auctioneers.
When providing an auctioneer with details of a property, it is preferable that sellers include a professional valuation report. Sellers must also appoint their own solicitors to assist them in preparing the necessary documents for auction, such as the Particulars and Conditions of Sale. A copy of this contract must be sent to the auctioneer at least five days prior to the auction date. In the contract, sellers must confirm the reserve price, which is the price that one is willing to accept for his or her property.
Once a seller has confirmed the reserve price, the auctioneer is not permitted to sell the property at a price lower than the reserve price. If bids meet or exceed the reserve price, the auctioneer may sell the property to the highest bidder.
Prior to the auction, the auctioneer may advertise a seller's property by conducting home viewings for prospective buyers. The auctioneer will first carry out an inspection and take photographs of the property, following which, interested buyers will be invited to view the home.
Once all home viewings have taken place and the seller has been provided with feedback from visitors, he or she may choose to revise the reserve price if necessary. However, any adjustments to be made to the reserve price must be submitted to the auctioneer in writing at least three days before the auction date. The revised reserve price will be kept confidential.
As these are mainly general procedures which take place during property auctions, there are aspects which may vary among auctioneers. Therefore, if you are interested in selling your property through an auction, it would be for the best to confirm the procedures you have to undertake with the auctioneer.