How does the auction process work and what are the guidelines a bidder should follow?
Auctions are about fluctuating prices versus the fixed price model of traditional real estate broking. The entire auction process does not differ drastically from the conventional private sale except that the bidders decide entirely what price they are prepared to pay.
Upcoming auctions are advertised in both the conventional property pages as well as the many national and local auction pages. Prospective buyers can attend auction previews, which are essentially the same as show houses, and inspect properties. At the previews they can ask questions about how the bidding process works as well as on other issues regarding what is payable at the auction.
On auction day, the bidders are all assembled and the auctioneer reads out the Conditions of Sale. He then lets the buyers ask any pertinent questions, and facilitates all the bidding increments and processes. When the property is knocked down to the purchaser, he will be called upon to pay a deposit as well as the auctioneer’s commission.
The most critical element for bidders is to pre-establish the price that they are prepared to bid and not to get caught up in ego battles with other bidders. Bidders should also be aware that auctions are non-suspensive and they should make arrangements before the auction to arrange finance.
READ MORE: Tips for buying and selling at property auctions
How to buy property at an auction:
Bidders should register as such, unless they are not required to do so.
Once the auction has begun, lift your hand or buyer’s card in the air to bid.
Make eye contact with the auctioneer when he acknowledges your bid.
Shout out your bid if necessary and attract the auctioneer and ring men’s attention.
Remove yourself from the bidding by shaking your head or saying “no” if the auctioneer turns your way.
Ask questions and get advice if you are unsure about any aspect of the auction sale.
Keep in mind that you are legally bound by your bid.
What not to do at an auction:
Bid if you have no money to purchase or have not made proper financial arrangements.
Be arrogant, bombastic or intentionally loud as this will irritate the auctioneer and your fellow bidders.
Be intimidated by other bidders as they may be trying to put you off bidding.
Be shy to ask questions if you are not 100 percent sure of all your obligations as purchaser.
Hesitate or procrastinate when bidding because you may lose the deal.
Contact the auctioneer after the sale for higher bids because it will most likely be too late.
Lose your bidder card. If you do, report it immediately.
What to do at an auction:
When you register, ask for a copy of the Conditions of Sale and thoroughly inspect them.
Pose relevant questions to the auctioneer before the sale.
Ask relevant questions at the designated question time.
Remember that auction sales are non-suspensive so do your homework.
Watch, listen, ask and bid only when you feel comfortable to do so.
Settle immediately after making your purchases.
Remember:
That commission and taxes may be payable over and above your bid price.
All auctions are taped in order to avoid confusion and disputes and each auction is audited.
Most auctioneers are all trained and qualified members of the SA Institute of Auctioneers and the SA Estate Agency Affairs Board.
All deposits are paid into a valid trust account in terms of relevant legislation.
Make your financial arrangements prior to the auction sales.
Now that you have armed yourself with some tips on how to buy property at an auction, have a look at the auction houses for sale currently listed on our website.
Written by Michelle Swart, in conjunction with Rael Levitt, CEO of Auction Alliance
Reprinted with permission from Home Front, November 2003
