11 auction terms you need to know
If you're new to auctions you may find them confusing, especially as they are so fast paced. There are lots of advantages to buying your Gold Coast real estate at auction, however, so don't be put off by this. It won't take long to get your head around the auction process, and to help you, here's a list of some of the most frequently used terminology you might hear at one.
The reserve price is the lowest price the seller will let their house go for, and is normally confidential. Once bids pass the reserve, the auctioneer will announce an auction is live – the highest offer will win the property.
Passed in is the term used when the seller's reserve price hasn't been met, so the property doesn't sell. This doesn't mean it's all over, however. The highest bidder might be called in for negotiations with the seller.
Conditions of sale
These are the legal terms that are imposed on the auction. They normally cover acceptable methods of payment, terms, buyer's premiums, possessions, reserves and the like. Usually the conditions of sale will be placed in the property's advertisement or sometimes will be read out by the auctioneer before bidding starts.
Home loan pre-approval
Some banks will provide you with a home loan pre-approval. This involves your loan limit being pre-approved for a certain period of time (often six months). As long as your circumstances don't change, you'll know exactly how much you can afford to bid for a house. A home loan pre-approval may make you feel happier going into the auction, as you'll know that your finances are already organised.
This is when an offer is made to the seller before an auction. The auction may still go ahead, however – often, the auction will be brought forward and the pre-auction offer will become the first bid and therefore the starting price for the property.
This is a bid made on behalf of the person selling the home. Vendor bids are only allowed if the auctioneer announces that it's a vendor bid, and can be placed only when there is a reserve on the property that has not yet been met. They are normally used to move along the bidding, so they're a good indicator that the price has not yet reached the levels the seller wants, and that the reserve hasn't been met.
Knocked down and hammer price
Knocked down is the term for the hammer coming down, thereby ending the bidding. Related to this is the hammer price, which is the price that a lot sold for.
This is when a property is sold without any warranties for the condition of the property – making buyers the sole people responsible for examining the property. It's also known as "as is, where is" and "in its present condition."
This is the fee that the auction house charges the seller – it's normally a percentage of the value of the sale.
When two buyers bid the same amount at exactly the same time. This is something that the auctioneer will resolve.
When a buyer can bid on a property without being physically present at the auction. Normally this works by the buyer submitting his offer before the auction. The auction company normally has a set of rules and guidelines that you can look up if you think you want to place an absentee bid. They tend to be unique to the auction house, so make sure you read the terms carefully if you wish to place one.
Hopefully our short glossary of terms will help you to secure a great deal when you go to auction for your Surfers Paradise property. Alternatively, we can also help you to put your house up for auction if you are thinking of selling your gold coast real estate. If you are unsure of anything, or want more information, give Ray White a call on (07) 5538 1555.