Auction Tips During Lockdown
Since March 2020, the property and real estate markets are examples of having to adjust to a new normal, as both consumers who are buying and selling property as well as those of us who facilitate this process have adjusted to the new restrictions around inspections and online auctions.
Two years ago, there would have been few of us who would have used Zoom or Google Meet on a regular, let alone daily basis, however these platforms have been instrumental in keeping businesses, workers and friends connected and we have seen how many of the interactions that previously occurred in person have been taken to the online environment.
Real estate industry is no exception to this, and as people have been able to work remotely and conduct business via Zoom, these platforms have helped the property industry transition and adjust into the online world with property being able to be bought and sold online as virtual auctions regularly taking place.
A virtual auction occurs essentially in the same manner as in-person auctions have previously taken place, with the main obvious difference being that they are held on computers (or smartphones), over the internet and generally on one of the various platforms created specifically with the auction experience and user experience in mind.
How to prepare for a virtual auction.
As with any property purchase, complete a thorough private inspection of the property to ensure it is right for you - where possible and practical.
As with any property purchase or auction it is important to do general research into the property market in your chosen location, comparing properties that have recently sold, and how much they have sold for. This way you will have an idea of what you should be bidding and the most you are willing to pay for the property. This research can be done through your agent or by searching online.
As with traditional auctions it is essential to have finances pre-approved and know what your limit is (and to not exceed your limit). In the event that you win the auction you will be required to transfer a deposit across almost immediately to secure the property. We advise that you have a separate bank account set aside with the deposit amount that you expect to pay if you're successful, a tip here is to ensure that the transfer limit on the account matches the potential deposit amount you will need to pay to avoid delays and unnecessary stress.
As with a traditional auction you will need to register for participation in the auction and confirm your details. This is a simple process in which you will need to provide proof of identity and contact details.
The actual auction process is very similar to the traditional auction process though it may feel strange bidding on a property in the comfort of your own home and viewing and placing bids on a computer as opposed to being surrounded by multiple people and feeling the tension of a traditional auction.
Bidding will take place as with any normal auction and you will be able to see the bids of competing bidders and place your own bids (depending on which platform is used this process may differ slightly).
- The Auctioneer
The Auctioneer will conduct the auction in the same manner as a traditional auction by accepting or denying bids, suggesting the increments and amount to raise bids by and controls the direction of the auction (though this is likely to be slightly less dramatic and theatrical than on an in-person auction day).
- The Winning Bid
As with traditional auctions once the reserve price has been met and the property is on the market the highest bid prior to the hammer dropping will win the auction. In the event that the property does not reach the reserve price the highest bidder and vendor will have the opportunity to negotiate a potential deal in private.
The post-auction process is very similar to that of in-person auctions, however with contracts and transfers taking place electronically.
The legalities for virtual auctions are exactly the same as traditional auctions so make sure to brush up on these prior to the auction so as to not make any easily avoidable mistakes.
- Relax and enjoy
With virtual auctions you can be in a relaxed environment such as the comfort of your own home or wherever you choose to be without having the stresses and fanfare surrounding you as with traditional auctions. This means you can sit back and enjoy the experience as opposed to getting caught up in the hype and moment.
Don’t get caught up with the fear of missing out and become irrational. This is much easier to do online than in person (how many of us have participated in an eBay auction and paid too much for something that we didn’t really want that much just because of FOMO?). Stay focused, keep a level head and bid with sense.
- Spare change
If possible, have an extra few thousand dollars in a non-rounded number aside such as $2,000 or $3,000. Most virtual auctions move in rounded bids of $10,000 or $5,000 and $1,000 nearing the end of the auction and having those few extra dollars aside may be enough to secure the winning bid.