Our recent on-line auction was a great success, and this result demonstrates how strong the housing market is right now and how popular online auctions are with buyers.
So, how do online property auctions work?
Today, there are very few things that can’t be brought into the digital world and be carried out online, and this goes for property auctions too. Particularly during these uncertain times due to the COVID-19 pandemic, more and more businesses are having to adapt their way of working to ensure things are run smoothly while operating remotely.
Online property auctions mean that you can bid on a property in real time, with the auction open for bids 24/7 until the end of the auction period. You can view images of the property, bid on it and buy it, all from behind your computer or phone screen. Bidding online offers all the same benefits of buying and selling as a typical room auction, such as access to a versatile range of unique properties and transparent sales.
There are two ways sellers can choose to auction their property; by unconditional online auction, or by conditional online auction.
Unconditional online auctions are where the exchange of contracts happens immediately as the ‘hammer falls’ or as the online time period ends (subject to the reserve having been met or exceeded). Completion is normally set 28 days from that point.
With Conditional online auctions, the successful bidder has a little longer to exchange contracts and complete the purchase, around 40 working days. This type of sale can often attract additional buyers as the longer period to arrange finance is often desirable.
Whichever method the auction is carried out under, all potential online buyers must provide payment details ahead of bidding to pre-authorise any sales. Inputting payment details ahead of bidding enables the successful bidder to immediately make their deposit payment and guarantee sellers confirmation of sale.
How to buy property by online auction
There are a few different ways that you can bid on property auctions online:
Live online bidding
Live online bidding is where you watch the auction countdown in real-time online, and place incremental bids against others tuned in via their computers, keeping up to date each time you are outbid and adjusting accordingly to ensure you are the successful bidder at the end of the countdown.
If you are the successful bidder on an unconditional online auction sale, then your payment method will be immediately charged the holding deposit amount, usually 10% of the sale price. For conditional online auction sales, if you are the successful bidder, then you will be charged a reservation fee and should endeavour to arrange finance for the full amount and complete the sale within 40 business days. Should you, as the buyer, not meet the deadline, then you will lose your holding deposit and the vendor is eligible to relist the property for sale by online auction.
Online proxy bidding
Online proxy bidding refers to when you’re unable to bid in real-time, and so you enter the highest amount that you are willing to purchase the property for and the online system will make incremental bids for you, up to that value. If your highest bid, or a bid entered by the system matches or exceeds the reserve price and is higher than other bidders, then you’ll win the auction and your payment method will be charged either the holding deposit or the reservation fee, depending on the type of auction sale.
Buying and selling property by online auction is a great alternative to the private treaty market, and while still offering the same transparent sales process of room auctions, it enables you far greater flexibility.