As online auctions quickly became the norm throughout the pandemic, many agents, vendors and buyers alike have found that adopting technology in running online real estate auctions have many added benefits.
A long-time advocate of digital tools, real estate coach Lee Woodward believes the use of technology in auctions provides better transparency for all parties involved in the sale. In speaking with real estate legal expert, Greg Jemmeson from JemmesonFisher, he says the agents need to be aware that the same conditions and laws apply just like in-person auctions. But what does this mean exactly?
When running an online real estate auction, agents still need to be mindful that:
Greg says, “With a Timed Auction if it commences from day one, the moment it goes online, a reserve needs to be set. You cannot commence an auction without a reserve being set before the auction. You can’t set it halfway through.”
Online auctions may become part of the process of private treaty sales as well. In 2019, 40% of the sales right across Australia were done, performed and transacted by auction. Greg says, “An auction is a process where we have legitimate competition for a commodity. Live streaming would be brilliant when you have two, possibly three people that had previously been on a private treaty wanting to buy the property. You could immediately start a form of auction.”
Every state has different requirements for the registration process.
Whether the auction is live-streamed or timed, there will be no cooling-off period. If the auction is timed and the property is sold before the final bidding time, then the purchaser would need to waive their cooling-off rights.
Purchasers who want to register to bid, either on a Timed Auction or streamed online, still need to come forward and be identified by the agent or the auctioneer.
The auctioneer must read the auction conditions out when they commence the streaming of the auction.
With a Timed Auction, if it’s set for 4:00pm Thursday, for example, you can commence bidding. Greg says, “Where the auction starts from day one until a final bidding stage, that is just an offer on the way through. It’s just a slow burn auction, and as far as the regulator’s concerned, that’s a valid bid. It’s registered, it’s recorded, and all parties can see it, but the final auction date is at some other set period of time. It is not underbidding as long as it’s clearly defined in the terms and conditions that it is a bid.”
On the fall of the hammer, an auctioneer essentially has total authority to bind both the purchaser and the vendor to the contract. This authority is undisputed, and Courts have repeated time and time that they will not interfere with than auctioneer’s ability to bind the parties on the fall of the hammer. With a live-streamed or Timed Auction, this would be immediately after the auction.
Whether live-streamed, timed or a traditional in-person auction if a purchaser refuses to sign and it’s okay for the vendor, the auctioneer will use their discretion.
Obviously, with streamed and Timed Auctions, the auctioneer will sign, because they’ve been given the authority. Greg says, “If the purchaser doesn’t proceed, then it’s a matter for the vendor to enforce the contract by way of specific performance or damages.”
Technically, in all states, a purchaser should be able to walk into a property and say, “I’ll buy it right here and now” and be able to exchange there and then on the spot. Greg says, “Some will have cooling-off periods. Some will be subject to finance. But, nothing is preventing me from, in any state, from buying a property there and then on the spot if the contract’s available and it always should be.”
This can vary by state, for example:
Greg says, “I would warn any agent to be very careful exchanging a contract without special conditions, because there may be some aspect of the property that needs to be disclosed, and without that disclosure and the special conditions, the agent can become liable for misrepresenting that property. It’s slowly being changed now. With the introduction of things like PEXA, the process is being far more streamlined.”
These are testing times, but this is also an opportunity to adapt to new and sometimes better ways of doing business.