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 had to (temporarily) settle for doing so from the comfort of their lounge instead, as agents moved to sell properties online during the pandemic.
While there are no longer any restrictions on in-person auctions in Australia, online property auctions have become one of the main methods to sell a property.
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.
The only aspect that differs between an online and in-person real estate auction is how they’re conducted.
Essentially, while an online auction is conducted virtually via a phone or computer from the comfort of your own home, an in-person auction is conducted face-to-face generally at the property.
In an online auction, the auctioneer and the agent are set up in a room (usually the office or the listed property) equipped with a camera and a computer to live-stream the event.
While an in-person auction can attract a large crowd and competitive environment, an online auction allows bidders to participate behind a screen, which can minimise the pressure that can come with an in-person auction.
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. With this method, every time a bid is entered the time allotted for the auction gets extended by five minutes.
Other agents use Zoom or Google Hangouts to run online property auctions, much like a livestream where bidders can call out to the auctioneer to make their bid just like they would at a regular auction. 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.
Like anything, there are pros and cons to consider when it comes to an online property auction.
Pros
- Buyers can bid from the comfort of their own home which can reduce the overall pressure and allow them to be more rational with their decision
- Can attract interstate homebuyers
- There is more flexibility for bidders to attend as they aren’t physically required on-site
- More privacy as other bidders can't read body language
Cons
- You aren’t given the opportunity to inspect the property one last time before the auction starts
- Relying on technology working properly can be risky
- You may not always know who you’re bidding against
- For some, navigating an online auction platform may be confusing
Before registering for an online 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.
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