If you are Australian and reading this then you'll wonder why I am writing about House Auctions but I have to say that I find them an absolutely fascinating way to purchase a house and that is how quite a few houses are sold here. And they are quite a spectacle too.
It is quite a different matter in England. There your house goes on the market..... you have appointments for potential buyers/ viewers - at all times (no fixed day) and then maybe/hopefully an offer. Then negotiations back and forth between you, the estate agent and the buyer and when a price is agreed it goes to solicitors... The legal process goes on and on (and on!) - maybe up to 3 months and at any time in all of this before you sign on the dotted line at the end of it all and contracts are exchanged and completion takes place your buyers can pull out of the whole deal, leaving you back to square 1.!! Here I think it is far better.... Essentially there are two ways....
1. You can have a fixed price for the house and invite offers (a private sale) and not have an auction and then offers are gathered up after several 'open days' (where the house can be viewed by potential buyers en masse) and hopefully an agreement met between buyer and seller on the price. When that is decided 10% deposit is put down by the buyer after which they decide whether the balance is produced in either 30 days or 60 days usually. End of contracts... you have bought your house...Or ...
2. You can go to Auction.. This is by far the most exciting but also nerve wracking for both seller and potential buyers....
Today Mr SE and I attended a house auction near us... (photo above, sorry not brilliant - taken with a phone ) ... You will also see that outside the house there is large board with photos of the interior .... also on the board are the opening times of the house (fixed) and the auction date and time... Usually there have been around 4 open inspections (where again you all look round en masse)... Sometimes there is a guide price, other times not, just an idea of what other sales have been achieved in the area recently.
So today the house was open prior to the auction for one last time and then on the dot at 1.30pm the auction began...
The Estate Agent stands outside the house and addresses the assembled crowd there (hoping that everyone wants to buy it and of course that will push up the price) . Usually people (like us) want to see the spectacle of the whole thing and the auctioneer too, as it is quite an art and today there were lots of people ... So, as I said he addresses the crowd and firstly 'bigs up' the house and the area and the fact that it is close to shopping facilities and the train station (with no mention of course of the train track which runs directly behind the house of course)...
And then he starts... "So ladies and gentlemen, what do you give me to begin - do I have an offer to start on this lovely house... ?" Deathly silence... "Surely you have not all come here today just to watch me? " (seemed like we had!) ... So then he begins and says that he would start at an offer of $875,000 from the vendor (don't know what that meant ... maybe that was the minimum they would accept?) "So, who is going to offer ? - I will go up in $10's (of thosands) if it makes it easier - any offers ladies and gents, any offers?" . "$900,000" shouts a man in a bright white shirt and green tie...... Again, Mr Estate Agent tries to get someone, anyone, to offer more, and keeps asking for more offers... None coming.. So in the end he says, "Selling once, selling twice, etc " and just before he says SOLD then decides he would have to go inside the house and confer with the vendor... !!
So off he goes and then returns outside again and says to the only potential buyer at the time that he was going to ask the crowd again for offers (as the vendor had insisted he did)... Immediately another lady (Blonde and sunglasses) comes into the whole thing and offers $905,000..... Mr Green Tie goes straight back at $915,000..... Blonde sunglasses offers $920,000, Mr Green Tie, $940,000. Sunglasses $945,000. Green Tie (obviously hoping to 'nail it') $960,000 .... Sunglasses shakes her head.... Auctioneer tries to encourage her to make another offer and asks us all if we would like to offer ... "Maybe another $1,000, - could be the best $1,000 you have ever spent in your life, -you know the house is worth it!"...... No more offers... He keeps on trying to get someone to offer and then eventually.... Going once, going twice, going three times... then 'For Luck' (so he says) he repeats the going once, going twice routine (I would have been very cross if I was Mr G.T. at that point) and then FINALLY... SOLD.......!! Green Tie gets the house and Mrs. Green Tie goes "Wheeeey haaaa" or something similar and rushes up from a way back and hugs Mr Green Tie ! (Maybe it was a Valentine gift! Ha! ) And we all clapped! Pure entertainment really.
(Mr Green Tie would then have had to stump up is 10% then and there decide with the vendor whether they would get the rest in either 30 or 60 days.. And that was that ... job done, one sold house.)
Such fun and quite a show.... - for all of us watching... However, I would be feeling quite sick if I had wanted the house or if I was selling it but I have to say I think that overall here it is a far, far better way of selling houses.
Ed.Note : I hasten to add that we only rent here...! Our only house is in UK...... at the moment.
Hi Sarah - sounds like you had a fun time (always more fun when it's not your cheque being handed over at the end of the auction!!) I have to say I don't like the process in Aus - don't know if it's different in Melb but in Sydney I always found it very artificial - to start with, a lot of the 'high-end' agents employed their own designers who basically removed all your furniture and had the house totally transformed putting 'dwarf' sized beds into small bedrooms and other deceptive tricks!(even down to supplying you with pristine bedding which you had to put on before leaving the house each day in case of an 'ad hoc' viewing!!)As a buyer, you never knew who the people were who were selling as you only had contact with the agent and the whole process I believe has driven the prices up in Sydney to ridiculous levels...In addition, you hand over your 10 or 20% on the day of the auction and are then committed to complete in the requisite 4/6 weeks - if your sale falls through, too bad, you get a crippling bridging loan.....that's not to say the system here is great when you are stuck in a 'chain' and waiting on other people to get their act together so you can eventually move! I think the auction route is a fun process to observe but I'm not too sure about the ethics!
ReplyDeletePerhaps I should suggest this to our agent when we decide to sell up our house in London. Presumably the deposit is non-refundable to discourage crazy people who might just bid for fun! ....
ReplyDeleteExcept for auction the rules differ in every state in Australia. For me the Tasmanian way is best. The agent negotiates with the buyer is authorised by the vendor to have the contracts signed and then it goes to the solicitor for exchange. Unless their is a condition attached - such as finance, or sale of property - once the agent has the contract signed by both parties it is a done deal. Without the worry and tension of an auction. Of course I am presuming that it hasn't changed in the last 12 years!
ReplyDeleteHi Sarah...how many tears did I shed over near misses in auctions in Sydney? To many to count! We finally bought outside of auction and that was nearly as excruciating. On to New Zealand and we were lucky to snap up a house in two days. My faith was renewed in the buying process.
ReplyDeleteSelling is another matter...I am with Susie on that one. Most unpleasant. I prefer buying and selling in the USA...all neat and tidy. We will happily rent in the UK...two sets of tenants is enough for me, could not imagine moving on and leaving a third!
On a positive note, guess what arrived for me this morning...three candles from The Real Flower Company..Eucalyptus, Lavender and Rose..your suggestion worked. I shot off an email to Mr. H as soon as I read your post. A big thank you to you!!!! ( I won't mention to him the order I put in for True Grace :) )
Jeanne
xo
how weird, I just thought all countries did Auctions, never really thought about it - but I have to say I hate auctioning, I think it is a terrible business, so many people go to auctions after spending heaps on building surveys, getting loan pre-approvals and the like, only to find the Auction goes for MUCH higher than anticipated and the potential buyer is left financial and emotionally drained. I think there needs to be a better way to auctions, maybe silent auctions would be more appropriate?? I just hate them, I hope I never have to buy at auction.
ReplyDeleteI did sell at one years ago, my first home, but that didn't go the way we wanted anyways... but that may have been due to the economic climate, so vendors do very nicely at auction these days.
Well, I'm totally intrigued by Ms Blonde Sunglasses - why did she wait so long? Was she in fact a fake bidder, just there to get Mr Green Tie up a bit????
ReplyDeleteIn any case, I can't help but be grateful that the process in the US and England (where my only 2 purchases to date have occurred) does not, as a rule, include auctions. I'd be a nervous wreck. And although a long, drawn out process is annoying, it's very hard as a buyer to have to pay lots of money for reports/inspections without even knowing if you'll get the house. At one point Scotland required all that before you submitted a secret, binding, bid, and it could cost a heck of a lot before you even had a bid accepted.
Hmmmm very interesting - I really enjoyed reading all your opinions and points of view on this one...Thank you so much for the comments. And, as I said I do not think I would actually like to buy this way - (it has been bad enough buying in Antique Auctions, I get so nervous,- let alone something as important as your home) but I did enjoy watching yesterday. And yes, Struggler, I did WONDER about Ms Blonde/Sunglasses also - I said the same to Mr SE and he said if that was the case she was playing a dangerous game because she could have come unstuck and 'bought' it by mistake....
ReplyDeleteOn reflection then it seems USA has the best system as both Jeanne and Struggler testify to this...
Again, thanks....