In this article:
Remote bidding and online auctions have been around for some time, but COVID-19 has thrust this method of buying and selling property into the limelight. Gone is the need to gather together on the footpath rain or shine while the property goes under the hammer. Now you can be anywhere in the world and still get to bid on your dream home.
Sounds easy, but if you’ve never had any experience of online auctions, it can be as nerve-racking as attending a traditional in-person auction. Here we’ll explain how this online technology works and give some tips for success.
How online auctions work
The technology platform and method of online auction often vary from one real estate agent to the next. Auction rules may also vary depending on where you live in Australia, with some states requiring buyers to register before making a bid. The two most common forms of online auctions are live streaming and online proxy bidding.
At a live-streamed auction, buyers use their phone, computer or tablet to watch the auctioneer conduct the auction in real-time. Bids are entered digitally via a keypad on the bidding screen or via phone for those not comfortable with bidding online. The auctioneer communicates each bid, and the bidders use their devices to keep track of their competition.
The online proxy bidding method is similar in concept to eBay, where there is a start and finish time that buyers can place bids. Often there are minimum bid increments and the auction time can be extended if bidders are battling against each other. You can also pre-submit your highest offer, and the online system makes incremental bids for you.
Just like a traditional auction, if the property doesn’t sell, the real estate agent will reach out to negotiate to the highest bidder – this time by phone or video.
We have you covered on all stages of your property journey
Online buyer tips for success
- Attend as a spectator. Most online auction platforms allow you to watch the proceedings even if you don’t want to take part as a bidder. The more online auctions you view, the more confident you’ll be when it’s your time to buy.
- Look for bidding patterns from the competition. Study a few auctions to work out the common bidding strategies people use – such as waiting and coming in high or using quick counter-bidding. If you can estimate your opponents’ bidding patterns, you can anticipate their next move and how to stay a step ahead.
- Get your finances pre-approved. In these uncertain times, financial pre-approval is more imperative than ever because sellers are keen to wrap up sales quickly. Having this preliminary approval from lenders puts you in a strong position to make a pre-auction unconditional offer. Knowing your borrowing power can boost your confidence as a bidder and stop you from overbidding. Speak to a Yellow Brick Road mortgage broker, and we’ll talk you through what’s needed to achieve pre-approval.
- Do your pre-auction due diligence. Just like a traditional auction, you need to be as prepared as possible. Remember that you can’t change your mind once you’ve bought at auction. Don’t bid unless your due diligence is complete – from checking the sales contract to researching comparable sales prices. As soon as the auction finishes, the deposit will need to be ready. Check with your agent in advance how to pay and what paperwork is required.
Online seller tips for success
- Choose an agent experienced in online auctions. You want to know that your agent has the experience and expertise in getting the best possible outcome when selling your property online. Not all agents were familiar with online auction technology before COVID-19, so check their track record and user reviews to be sure of their competency.