Many things have changed as a result of the coronavirus, including the way we buy and sell property.
Keen buyers who would normally get up early on a Saturday morning to head out to an auction have had to (temporarily) settle for doing so from the comfort of their lounge instead, as agents move to sell properties online.
While the ban on auctions has been lifted in Australia (with restrictions on the number of people who can attend), online auctions might be one of the ways people buy homes moving forward.
So if you’re thinking about buying a property at a time like this, here’s what you need to know about how online auctions work.
How the online auction process works
There are a few different online platforms agents use for online auctions but the most commonly used ones are Gavl and AuctionNow. Some agents also use SoldOnline and Openn Negotiation where buyers can place bids similar to how they would on eBay. Other agents use Zoom or Google Hangouts to run online auctions and bidders can call out to the auctioneer to make their bid just like they would at a regular auction.
Online auctions run like a mix of a traditional auction and a live stream, with buyers placing bids while watching the auctioneer on the screen.
Another method of online auction involves buyers submitting bids (like they would on eBay) but the time allotted for the auction gets extended by five minutes every time a bid is entered.
A live-streamed auction is pretty much exactly what it sounds like: a camera films the auctioneer while bidders who are registered from remote locations via their computer or smartphones make bids.
Buyers have to be approved by the property’s listing agent and submit their credit card details before they can make bids. A hold is usually put on the bidder’s credit card which is usually between $1,500 to $2,500.
The auctioneer can choose to accept or reject bids. If a property meets the reserve price, the property sells and if it doesn’t, the auctioneer can negotiate with the highest bidder.
If you are the highest bidder once the hammer falls and the reserve has been met, the property is yours!
How the contracts are handled afterwards will depend on the online platform the listing agent is using to run the auction.
Some platforms provide a digital exchange of contracts and bidding authorities, while some listing agents will just get in contact with the successful bidder to discuss contracts.
Get pre-approval from a lender
Before registering for an auction, sort out your finances to make sure you can afford the property and get pre-approval from a lender. Having a strong understanding of your finances will help you know your bidding limits on auction day.
Speak to a loans.com.au lending specialist to get auction ready or use the form below to find out if you qualify for a home loan with us:
Do I qualify?