In some cases, there are no successful bids placed on a property come auction day.
So, what happens next and what does it mean for both the vendor and prospective buyers?
Sometimes, you have a group of bidders who may be hesitant to open the auction or keep it going after a certain point.
When no bidding takes place, a vendor bid is made by the auctioneer and this can be all that is required to set the wheels into motion.
In a situation where there was some bidding, but the vendor’s reserve price was not reached, the auction will pass in.
The real estate agent will then negotiate a price between the highest bidder and the vendor.
This will usually take place behind closed doors and can possibly take several days and in some cases, with no end result.
For the seller, they may have set their reserve too high and as a result, they will have to adjust their price expectations in order to close a sale.
Should a result not be achieved, they can choose to put their property back on the market and sell the property via a private treaty, perhaps with a different agent.
Vendors should not be disheartened as a private treaty may ultimately prove to be the best method to sell their home.
From a buyer’s perspective, when no bids are placed on a property at auction, this is good news.
Some vendors may not want to put their property back on the market and are more open to negotiations.
This can result in buyers snaring a home for a lower price than what was expected.
A failed auction is not always a disaster as long as both vendor and buyers are prepared to negotiate.
Whether you’re selling or buying, you should always make sure your finances are in order. Contact your local Mortgage Choice broker today who can assist with the process.
Do you need pre-approval to bid at an auction?
It is not mandatory to have a home loan pre-approval in order to bid at an auction but it is a highly risky strategy. It provides you a level of certainty in how much can borrow and what your upper budget limit during the time of your bid.
Bidding at an auction without pre-approval is similar to going shopping without knowing if you have enough money to pay for all the items you intend to purchase once you arrive at the counter.