With strict lockdown restrictions still in place for Melbourne as we move into the spring selling season, online property auctions will once again be used as a viable and secure way to buy or sell a property.
Digital auctions have been used alongside ‘live’ auctions for many years -in particular, to facilitate the process for interstate or international buyers.
With current COVID restrictions, online auctions will replace live auctions until these can once again be safely conducted.
What is an online auction and how does it work?
An online auction can be run in one of two ways.
A live-stream auction is where bidders register and log in remotely, using laptops, smartphones or tablets to participate. The bidding process is identical to that of an on-site auction, with only the ‘face-to-face’ element missing.
Bids are submitted through a digital platform and either rejected or accepted by the auctioneer, who controls the auction, suggesting bid increments, accepting or denying bids, and following the rules of a traditional auction.
If a property meets or exceeds the reserve, the property is sold. If not, the auctioneer will call the highest bidder and begin negotiations.
The second form of online auction is much like buying something from a company which uses a bidding process to transact.
Bids are submitted in increments within a given time frame. The deadline can be extended until all bids are exhausted. The successful bidder then conducts a digital exchange through a digital platform to complete the sale.
The two main online platforms used in Australia are Gavl and Auction Now. To participate in an online auction, bidders create an account and provide identification to prove they are a genuine buyer.
After a successful sale, the sale can be finalised through a digital exchange of contracts or through phone-based negotiations.
How can I prepare for an online auction?
Inspect The Property
While in-person inspections aren’t currently permitted in Melbourne, you can arrange a virtual inspection through your agent. If restrictions allow, driving past the property to see its current condition and the local neighbourhood is also a good idea.
Get Your Finance in Order
Buying at auction -whether live or virtual – is a binding financial transaction, so make sure you have your finances in order before you register and bid. If you are the successful bidder, you will be required to pay a deposit on the day. There is no cooling-off period for a property bought at auction.
Do Your Research
Ask for a copy of the contract and the section 32 well before the auction date, so that you are fully informed about the property before you make a bid. Organise a building and pest inspection (if restrictions allow), to get a full picture of the condition of the property.
The Home Inspection Hub are Melbourne’s leading residential building inspection experts. If you are looking for a reputable, experienced and reliable inspection company, give us a call to see how we can assist you in line with current restrictions.