a guide to selling at an elders easy auctionauction

At auction, Prospective Buyers bid against each other in a public forum at a date and time specified by you. As the Seller, you will set a reserve price prior to the auction, this is the minimum amount that you will accept for your home.

Interested parties may submit an offer prior to the Auction day and you, as the Seller reserve the right to accept the offer and end the Auction campaign.

An auction is a three pronged marketing push. You have the opportunity to sell your property before auction, on the day of the auction, or in the event the property is passed in, after the auction.

Advantages of selling at auction:

- Control. You dictate the terms, not the Buyer, which is normally the case in private treaty sales.- Price is taken out of the equation. Limiting the property to a certain price range can also limit the amount of buyers you appeal to. - A high intensity marketing campaign is conducted over a 4 week timeframe. - Auction creates a sense of urgency which motivates Prospective Buyers to make a decision on or before Auction day.- Competition amongst Prospective Buyers at auction frequently achieves a higher price.- You get a cash unconditional contract, if the property sells before Auction or on Auction Day.

what’s inside?preparing for the auction campaign

duration of the auction campaign

auction day

post auction

frequently asked questions

To kickstart the auction process your Real Estate Agent will meet with you to complete all of the required documentation and to discuss particulars regarding the sale which are to be included in the contract.

- Authority to auction- Sellers disclosure statement- Auction particulars and condition of sale of freehold property- Joint Form Of General Conditions

The following items will be discussed and included in the auction documentation:

- Items not staying with the home- Items staying with the home- Items not working; which will not be fixed- Council approvals for building, extensions, additions, pool, etc.

At this point please provide your Real Estate Agent with the following items:

- Floorplan of the house/land (if available)- Information on council approvals for extensions/ additions- Council approval of the pool and pool fence (if applicable)- Electrical safety certificate- Strata company details, fees, recent AGM minutes and finanicals (if applicable)

preparing for the auction campaign

contract & documentation

Typically an auction property should be marketed for a period no longer than four weeks with the auction being held on the week following.

Typical Costs:

* Professional photographs POA* Photo Signboard POA* realestate.com.au - feature listing (30 days) POA - highlight listing (30 or 45 days) POA - premier listing (30 or 45 days) POA* Newspaper advertising - The West Saturday Newspaper POA - The Sunday Times POA - Local Community News POA* Auctioneer’s fee POA

* Internet marketing included: No charge - elderswetherall.com.au - elders.com.au - domain.com.au - homehound.com.au - irealty.com.au - homesales.com.au - homely.com.au - squiiz.com.au* Standard marketing included: No charge - Full colour window card - Property brochure

On Auction day bunting and signage will be erected to help create a positive atmosphere. The idea is to create excitement, enthusiasm and expectation.

formulate marketing campaign

Prior to the beginning of the auction campaign, your Real Estate Agent will discuss with you a schedule for home open times which will be set and advertised to the public from the beginning of the campaign.

A final home open will be held for 45 minutes on the day of the auction, concluding approximately 15 minutes prior to the start of the auction.

After each home open your Real Estate Agent will keep you informed of the feedback/comments made about the property by the Prospective Buyers. Their comments often include a suggested sale price which will give you a great indication of what the public believe your property is worth.

This information will be useful when determining the reserve price.

duration of the auction campaign

home opens & viewings

Setting the reserve price is partly about your personal comfort level but also partly about how a high, low or predictable reserve price may affect the bidding activity on the day at auction. While every auction is unique, there are usually some common ideas that you should be aware of.

Auctioneers will let the bidders know when the reserve price has been reached, but not a moment before. This announcement may see some interested parties who were previously holding back, jump in and bid.

One concept is that some buyers may be more willing to bid if the property is officially “on the market” – or when another bidder has met the reserve price.

For this reason, setting the reserve too high can actually be prohibitive and stop other potentially interested buyers from purchasing. This often applies to investors and there are a number of people who will not raise their hand to bid unless they know it’s truly going to be sold under the hammer.

This thought process and consideration is about making sure you can continue the momentum and energy in the auction, something that your Auctioneer can explain to you.

The reserve price will be finalised either a few days before or on the day of the Auction.

start to consider the reserve price

Throughout the duration of the campaign, your Real Estate Agent will receive feedback from Prospective Buyers as to what they feel the best features of the property are. This information can be very useful when determining which part of the property the auction should be held.

For example; the main living area of the house could have large light filled windows with a great view or the backyard could host an incredible outdoor living room or pool.

The location of the auction is one of the most important decisions to make as you want the Prospective Buyers to be looking at the best feature of the home so they are emotionally invested.

start to consider the location

Your Real Estate Agent and Auctioneer will arrive before your property is opened for the final home open.

At this time the Auctioneer will sit down with you to discuss and finalise the reserve price.

auction day

finalising the reserve

the auction process

The auction is opened with the Auctioneer announcing the attributes of the property and any relevant details such as restrictions on the title and the deposit required. The Auctioneer then calls for, or announces an opening bid. The price is raised progressively as the Auctioneer accepts more bids.

When the reserve price has been reached or exceeded, the Auctioneer will usually indicate this by saying “this property will sell today” or “this property is now on the market” or something similar.

The person who makes the final bid must then complete the transaction by formally signing their offer to buy.

When a property is sold at auction, a deposit of 5% or 10% of the purchase price is required to be paid when the sales contract is signed. The remainder is paid at the date of settlement, which is usually 30 days after the auction date.

If the auction fails to reach the reserve price, the property will be ‘passed in’. The Auctioneer, gives the highest bidder at the time of passing in the property, the first right of refusal or the first right to negotiate.

auction conditions & rules

This auction is being conducted under certain conditions that are set by law.

- The auction will be conducted in accordance with the REIWA’s Code of Conduct.- The auction rules permit the making of bids on behalf of the Seller. The law prohibits the making of ‘Vendor Bids’ other than by the Auctioneer.- The Seller is required by law to show if they intend to bid and how many bids they intend to make (outlined in the Auction Particulars and Conditions of Sale of Freehold Property form). The Seller often reserves the right to make ten such bids on the property. - During the auction, the Auctioneer will say ‘Vendor Bid’ when making bids on the Seller’s behalf.- The law prohibits a person from falsely claiming or falsely acknowledging that he or she made a bid.- The law prohibits an intending bidder or a person acting on behalf of an intending bidder from intentionally preventing or causing a major disruption to the auction.- When you sell at auction the sale is an unconditional cash sale, therefore all inspections such as pest, building etc must be conducted by Prospective Buyers prior to the auction and do not form part of the Contract.- Finance must be approved prior to auction.- The successful Buyer is the highest bidder, subject to any reserve price.- The successful Buyer must pay a deposit at the time of signing the contract (immediately after the conclusion of the auction).- The Auctioneer has no authority to accept a late bid, that is, a bid after the fall of the hammer.

post auction day

process if sold at auction

It is important to appoint a Settlement Agent ASAP to begin the process of transfer of land etc.

When you have nominated a Settlement Agent, please email their company name, contact name, email address and phone number to the Real Estate Agent.

A copy of the signed contract will be forwarded to your Settlement Agent along with other relevant information.

We work closely with your Settlement Agent throughout the process, keeping them up to date on the progress of the contract, corresponding with them frequently.

Appoint Settlement Agent

Deposit Paid

In accordance with the contract the Buyers are required to transfer the deposit funds to the Elders Sales Trust Account immediately at the conclusion of the auction.

Contract Signed

At the fall of the hammer you are required to remain at the premises and immediately sign the contract (3 x copies) with the Real Estate Agent and the Buyers.

A copy will be provided to you for your records at the time of signing.

Settlement

Providing that the Contract terms are met, the general conditions provide that the Buyer/s is entitled to the keys at Settlement.

If immediately prior to the Settlement the Seller occupies the property as the Seller’s principal place of residence then the Seller may remain in occupation until 12 noon on the day following Settlement. If that is the case then the Buyer will not be entitled to the keys until 12 noon on the day following Settlement.

Please note; this process only outlines the involvement that we have with you as your Real Estate Agent. It does not include the process that you will follow from acceptance of offer to settlement with your nominated Settlement Agent.

“passed in” at auction

The first step is not to worry – the result is not a bad one. The good news is that majority of homes will go on to be sold afterwards, if not in the hours immediately post-auction then usually in the days or weeks following.

It is the law in Western Australia , that the first right of negotiation after a property has been passed in rests with the highest bidder. These discussions start directly after the auction has finished, with your Real Estate Agent acting on your behalf.

It is important to go into these discussions with an understanding as to why your property did not sell at auction. For example, you may have set a reserve price that is deemed to be higher than market value and therefore the buyers were not prepared to meet it. Having a general idea, assisted by your Real Estate Agent’s advice should help you to better reach a settlement that is favourable to you as well as being realistic. Depending on your need to sell, it will also be important to go into these discussions prepared to negotiate. You want the best price; however you could be financially committed to another property that requires funding to settle. It is important that your agent is aware of your situation and the importance of achieving a sale, keeping these in mind throughout their negotiations with potential buyers.

Remember that your agent is looking out for your interests and wants to achieve the best possible sale price for you.

In the end, it is a possibility that every auction could end with the property in question being passed in. Just remember to stay calm and focused throughout the negotiations that take place afterwards and, with the help of your agent, you should be able to achieve a good sale.

frequently asked questions

No. Upon receiving contact details for your Settlement Agent, Elders will post a copy of Contract directly to them.

Do I provide my Settlement Agent with a copy of the Contract?

Under legislation introduced in 2009, Seller’s of residential properties are required by state law to have two RCD’s installed at the property and hard wired smoke alarms. These safety devices must be installed by the Settlement Date.

There can be an exemption where the Buyer will be demolishing the property. A specified date for the demolition must be nominated and cannot be more than six months from the date of transfer.

The regulations mainly affect properties where construction commenced before 2001, when it became compulsory to fit at least two RCD’s and hard wired smoke alarms in all newly constructed dwellings.

An electrical safety certificate completed by a qualified electrician will be provided to nominated Settlement Agents by the Seller to provide evidence that it meets legislation.

What are the RCD and smoke alarm laws?

The Joint Form of General Conditions for the Sale of Land which forms part of the Contract are additional conditions to those already incorporated or written into the Contract for the Sale of Land/Strata Title by Offer and Acceptance.

The Joint Form of General Conditions for the Sale of Land largely clarify areas where there is the potential to have a legal dispute about the Contract, the Property, or the Settlement of the Property.

What is the Joint Form Of General Conditions?

It is a bid made by the auctioneer, on behalf of the Seller.

What is a vendor bid?

Yes, Prospective Buyers are able to submit an offer prior to the auction day. As the Seller you reserve the right to accept the offer and end the Auction campaign.

Can a Buyer submit an offer prior to the auction day?

The price below which the Seller will not sell.

What is a reserve price?

The property has not sold as the bidding has not reached the Seller’s reserve price.

What does ‘passed in’ mean?

The highest bidder at the close of auction is afforded the opportunity to negotiate with the Seller. If the negotiation with the highest bidder does not progress, the Real Estate Agent will contact other bidders to encourage them to submit an offer.

If the property was ‘passed in’ on a vendor bid, the Real Estate Agent is at liberty to negotiate with any genuine buyer.

What happens if the property gets ‘passed in’?

Up to ten vendor bids are permitted throughout the auction. The seller is required by law to show if they intend to bid and how many bids will be made (outlined in Auction Particulars and Conditions of Sale of Freehold Property form).

How many vendor bids are allowed?

Both parties have a 3 Business Day grace period after the Settlement Date for Settlement to be completed.

If Settlement is delayed beyond the 3 Business Day grace period, whomever is responsible for the delay (Seller or Buyer) may be required to pay to the other party at Settlement interest on:

- The balance of the Purchase Price; and- Any other money payable at Settlement

Interest payable and compensation allowable (as outlined above) is to be calculated:

- At the Prescribed Rate; and- From and including the Settlement Date but excluding the date on which Settlement occurs

And will be treated as being in full satisfaction of any claim the Party claiming interest or compensation has against the other Party as a result of the delay in Settlement.

We, as Real Estate Agents are not involved in the calculations or collection of penalty fees for the delay in settlement. It is handled by the parties nominated Settlement Agents.

What happens if Settlement is delayed?

When a property is sold at auction, it is a cash unconditional sale which means that it is not subject to any conditions or inspections.

Therefore if a Prospective Buyer would like to conduct a building or pest inspection they will be required to do so at their own cost and prior to the Auction Day. The results of the inspections will not factor into the Contract For Sale.

If you would prefer minimal disruption throughout the auction process, you may consider paying a contractor to conduct a building and pest inspection and make this information available to Prospective Buyers.

Can a Prospective Buyer conduct a building or pest inspection?

Bayswater Office(08) 9371 1000(08) 9371 2601

83 Whatley CrescentBayswater WA 6053

reception.bayswater@elderswetherall.com.auwww.elderswetherall.com.au

Date Created: 6th February 2015

Midland Office(08) 9250 5400(08) 9250 5455

16 Clayton StreetBellevue WA 6056

reception.midland@elderswetherall.com.auwww.eldersmidland.com.au