House Auction Jargon Every Home Buyer Should Know
These days it’s less common to have houses sold by private treaty. Instead, house auctions are becoming more popular than ever. It gives the seller the opportunity to pit potential buyers against each other in their eagerness to outbid the other and claim their dream home.
The auctions are usually conducted by the sellers’ agent who, as the name suggests is working for the seller and will do everything possible to generate the highest and best outcome for their client. As a buyer, you can prepare yourself and get used to some of the terms you will come across while attending house auctions.
This price is the minimum the seller is willing to accept for their property sale. The seller sets this price with the agent before the auction. The main aim of any house auction is to achieve a much higher bid than the reserve price.
Sometimes there may be no bids forthcoming at an auction, with each one waiting for someone else to start bidding. In such cases where the auction has stalled or isn’t moving, the auctioneer can make a bid on behalf of the vendor to get things moving. This bid will usually be closer to the price the vendor is prepared to accept, and the bids will continue from that point.
When the auction fails to generate a bid that meets the reserve price, it’s ‘passed in’, that is the seller may withdraw the property for sale. The highest bidder then has the first right of negotiation with the seller for a private treaty sale that would work for both parties.
Fall of the hammer:
This signals the auction close. The agent may not use an actual hammer but will signal the end of the auction when there are no more bids put forward.
Generally speaking, everyone with lower bids than the highest bidder is an under-bidder. But this usually applies to the second-highest bidder. Having this bidder around can come in handy in case the top bidder backs out at the last minute and doesn’t end up buying the property for some reason. The second highest bidder would, in that case, still have a chance.
A set number of days (varies from state to state, usually five business days in NSW) in which the buyer can reconsider their decision and decide to withdraw from the contract of sale. However, it’s important to remember that cooling-off periods do not apply to houses sold at auction unless a private treaty sale is agreed upon between the two parties after the auction is passed in.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for information about the best options for you when it comes to your mortgage.