Selling real estate property by Auction has become a popular method of marketing and selling property in Australia. This method offers substantial benefits to both the buyer and seller.

An auction is a sale in an open forum whereby the highest bidder' is successful, and may be subject to certain Vendor conditions. The choice between Private Treaty, Tender and Auction needs to be carefully considered and the Agent should only recommend Auction if they believe it is the most appropriate means by which to sell the property. The Agent will advise the Owner of the three criteria by which to assess the suitability for choosing auction as the means for sale. These criteria are:

1). Market conditions
2). Suitability of property type
3). Vendors circumstance

There are certain phases of the Real Estate cycle during which the Auction process if likely to be more successful and each geographic area will include certain properties that are better suited to sell at Auction and others that are less likely. The process commences with a licensed real estate Agent providing a market appraisal of the property. It is important that the Vendor and the Agent have an understanding of the value of the property.

The lead time for promotion of the property is about 3 to 5 weeks with the property being made available for inspection either by home open or private inspection at least 5 - 7 times with the auction normally conducted on site.

The Real Estate Institute of West Australia (Inc) has produced a clear Auction Contract, which includes the Joint Form of General Conditions for the sale of land that incorporates the following:

• The Vendor's representative/Agent, a formal description of the property and its inclusions, any encumbrances that may or may not be evidenced on the title, property zoning and uses and whether existing tenancies apply, or the subject property is to be sold with vacant possession.
• General conditions provide the parameters under which the auction will be conducted including a reserve price, handling of any disputes amongst bidders, confirmation of a settlement date and the acknowledgment of the General Conditions for the Sale of Land, which are for the benefit and protection of both the buyer and seller in any auction sale.
• There is a provision for any Special Conditions if required, which may relate to chattels, vendors or statute requirements etc. The contract simply includes provision for the purchaser's name and address, the amount of the purchase price (highest bid), a deposit normally of ten percent and for the document to be executed by the purchasers and the appointed Auctioneer/Agent.

The REIWA Auctioneer must be licensed to conduct auctions. All REIWA licensed Auctioneers are bound by a strict REIWA Members' Code of Practice, REBA Code of Conduct and the Auction Sales Act. The Auctioneer/Agent and Vendor jointly sign an agreement form called the Authority to Auction, which outlines the property's marketing strategy, inspection details, instruction for auction and the reserve price. It clearly states the Auctioneer/Agent fees for service and the agreed amount of marketing expenditure to be paid by the Vendor.

Advantages:

• Competitive bidding achieves the best result.
• The market decides the value of the property while the Vendors don't have to show their hand.
• Auction listings are prominent and maximum exposure will interest more people in your property.
• The sale is unconditional.
• Selling the property on your own terms, you can move house to your own timetable.
• Inspections of the property are managed through home open days and private appointments if necessary.
• Auction is the fairest way of determining the real market value of the property and resolves any dispute established with a deceased estate.

Advantages:

• The open forum gives you knowledge of your competitors.
• There is a good chance the property will be sold on the day, which means it's unlikely there will be protracted battle between prospective buyers.
• All legal and planning requirements are declared prior to the auction.
• If you are not successful at purchasing at Auction and you are the highest bidder you would normally have the first right to negotiate.

Three distinct ways to sell the property:

• An acceptable offer is received before Auction.
• On the day.
• Through negotiations afterwards if the reserve price has not been reached.

The Auction begins with the Auctioneer outline the necessary details of the property contained in the Particulars and Conditions of Sale of Freehold Property and Contract. This is followed by a brief description of the property with the right to ask any questions. The Auctioneer will then call for bids. There are various outcomes possible at the Auction:

• If the highest bid reaches or exceeds the reserve price, the property is sold and the Contract is signed immediately by the Purchaser and the Vendor's representative. A deposit of 10% of the sale price is required on the signing of the Contract.
• The Auctioneer may sign on behalf of the Vendor. This is useful when the property is owned by a number of Vendors.
• If the highest bid does not reach the reserve price the Auctioneer will usually ask for the Vendor's instructions before passing the property in. This gives the opportunity to reconsider the reserve price. If the Vendor does decide to sell, further bidding follows and a higher price may be achieved. If the Vendor approves the price, the property is sold "under the hammer".
• If the highest bid does not reach the reserve price, the property is passed in for private sale. The highest bidder is informed of the reserve price and given the first option to purchase at the reserve price. Failing this, the property is placed on the market for private sale. Anyone present may then negotiate with the Auctioneer.
• If a sale is not negotiated with anyone present at the Auction, the Auctioneer will follow up all enquiries made before and after the Auction day and continue to achieve a sale as quickly as possible. The Auctioneer has exclusive agency for a specified period after the Auction date to achieve a sale.