How does a property auction work?

Author
MyProperty
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A property auction is when a property is sold to the highest bidder - this can be done on-site or at an online auction event.

Keep in mind that there are different types of auctions, namely:

  • A voluntary auction is where the seller has freely decided to put the property on auction, hoping to get the best deal by playing buyers against each other in a live venue or online.
  • A bank auction is organised by the bank, usually on behalf of a seller who is in arrears with his or her bond. This type of auction benefits the buyer as the property is sold at a reduced price, and the rates and taxes are handled by the seller.
  • A sheriff’s auction occurs when the bank is unable to recover the funds from the current bond holder, and instead applies to the court to auction the property. This is usually the best source of value for buyers as the properties are sold at a significant discount, sometimes up to around 50% of the property’s value.

If you want to buy a property on auction make sure that you are prequalified, that you have finances ready as the payment of the deposit is usually required immediately, in cash, after the winning bid and the auctioneer also requires a commission payment worked out as a percentage of the auction price. It is also advisable that you read the conditions of the sale carefully.

Here are some common auction myths we debunked

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