real estate auction

What everyone should know about buying a house at auction (part 2)

by Chris Lang on July 27, 2012
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During the auction

Here are the terms you must know to understand what’s going on during the auction.

Reserve price – the vendor has set a minimal price that he would be willing to sell for. The auctioneer doesn’t reveal this price so nobody knows what it is.

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What everyone should know about buying a house at auction (part 1)

by Chris Lang on July 25, 2012
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Even now, when the real estate market is slowing down, at least 50% of the houses are sold at auctions. This means that any home buyer should know exactly what to do at auction, what are the rules, understand and speak the language of auctions. Before I knew all the things you are about to learn, auctions scared the daylight out of me. Especially because of the huge amounts of money involved – every silly mistake can cost you a lot.

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Are property auctions going out of favor?

by Chris Lang on August 30, 2011
Are property auctions going out of favor?

Property auctions historically were the most poplar selling tool in Australia, but in the current market the clearance rates are significantly lower than they used to be. Even on the popular reality show “The Block”, 3 out of 4 renovated houses failed to sell on auction – an auction that was witnessed by close to […]

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“Hot Property – Bidding Wars” DVD review

by Chris Lang on August 10, 2011
"Hot Property - Bidding Wars" DVD review

I’ve just finished watching the “Hot Property Bidding Wars”. It’s a new DVD with 8 episodes of this show, hosted by Michael Caton (you may remember him from the movie “The Castle” ). Personally, I found it fun to watch, and educational in a way. This DVD takes you “behind the scenes” of many property […]

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Don’t believe auction results that you see

by Chris Lang on March 7, 2011
Don't believe auction results that you see

I don’t quote the news often, but this deserves your attention. Apparently quite a few agents are not reporting failed auctions in a desperate attempt to cover up. In News.com.au they call them “embarrassed agents” – I, however, think this act has little to do with embarrassment – when a growing inability to sell a […]

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How to protect your money from dummy bidders at property auctions

by Chris Lang on November 8, 2010
How to protect your money from dummy bidders at property auctions

Property auctions are pretty expensive staged shows. They are free for the crowd, but can be rather expensive for the bidders. To make them even more expensive for the genuine bidders, some agents and auctioneers use dummy bidders to help drive the price of the property up. Not sure what dummy bidders are? Dummy bidders […]

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Making an offer prior to auction

by Chris Lang on June 29, 2010
Making an offer prior to auction

Property Auction I’ve had an experience lately of making an offer on a house prior to auction. In Melbourne, where vendors seem to just love selling their houses on auctions, people like me, who favour private sales, are clearly a minority :).

I used to think that when a certain house goes on auction there was no way around it, except for turning up on the auction day and bidding with the rest of the pack. So if you are thinking the same, I’ve got news for you – there is a way out, and it’s called making an offer prior to auction.

Making an offer prior to auction is a science on its own right. Mainly because you need to work out what price and settlement period would tempt the vendor into giving the auction up, without being a mind reader. You need to time your offer so that it gets accepted, before another buyer comes along and makes a better offer. The reason for this is that once one offer has been made, it will be disclosed by the agents to other potential buyers to try and get them to go higher, transforming the whole process into just another auction. This would be the opposite of what you’ve meant to achieve.

As always, agents are in advantage in any case – if the house sells prior to auction, the buyer has made their job simpler, and if not – they can adjust the vendor bid accordingly so that it’s equal or higher than highest received offer. In fact, at open houses they will encourage people to make offers, to ‘feel the market’ and to have leads to come back to, should the house pass in.

A trick that you can expect them to pull on you is to demand an unconditional offer. Just to be clear, there is no law that says “all offers on houses advertised for auctions must be unconditional”. In many cases agents will have you believe that going unconditional is the only way to get your offer passed on to the vendor – which is not true. They must pass any and every offer, conditional or not, unless the vendor has instructed them to not take anything less than X (and your offer is below), or if the vendor is not open to selling prior to auction at all.

It is true that as it gets closer to the auction, when a vendor compares two offers where one is conditional and the other one is not, the unconditional might win, even if they offer a bit less – just because it’s less risky. But if you are submitting an offer well before the advertised auction (4 weeks for example) and it is conditional on building and pest inspections done within a short period of time (a week), the risk for vendor is not all that big because there’s plenty of time left.

In my opinion, because timing is rather important, it makes sense to offer your best price and terms when making the first or the second offer. If there is a lot of interest, a buyer that is mucking around with the price and offering small increments risks losing to another person who offers a far better price at one go. Also, make it clear to the agent that you won’t be bidding at the auction and set an expiry date on your offer to put the pressure on the vendor. Make your offer expire before they have another open house, to reduce chances that they encourage another buyer to compete against you.

That’s it from me, and now it’s your turn – what are your best tips for making an offer prior to auction?

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Carnivals, Festivals and Linklove: what I have been up to this week

by Chris Lang on December 26, 2008
Carnivals, Festivals and Linklove: what I have been up to this week

If you liked my Household survival tips, you will definitely enjoy the Festival of Frugality – there is a wealth of money-saving tips and many interesting articles. My post about 8 proven ideas to save on fuel is there too. Another carnival to check out is the Homesteading Carnival over at A city on a […]

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What “Under offer” and “Under contract” means

by Chris Lang on September 20, 2008
What "Under offer" and "Under contract" means

The process of buying a house, like any other process, has several stages. Terms “Under offer” or “Under contract” are essentially the same, they indicate the status of the house through the selling process – note that they only apply to a private sale and never to an auction.

When a house is “Under offer” or “Under contract”

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Live house auction – have a look

by Chris Lang on March 1, 2008
Live house auction – have a look

Many people have told me they find auctions stressing and intimidating. But let’s face it – more houses are sold now on auctions compared to private sales, so limiting yourself and passing on auctioned properties just because you are scared of the process is not a good idea.

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Buying a house: Auction Vs. Private sale – Part 3

by Chris Lang on June 24, 2007
Buying a house: Auction Vs. Private sale - Part 3

There is also a relatively new thing, called “For sale by private bid”. It means that the house is advertised with asking price, to give buyers …

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