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I saw an Australian sitcom where the house went up for auction. It was a proper live auction where everyone showed up to bid on the house. I was flabbergasted a

I saw an Australian sitcom where the house went up for auction. It was a proper live auction where everyone showed up to bid on the house. I was flabbergasted as I had no idea things were done in any other way than blind bidding as that is how it is always done here in the US.

stevesimmons 5y ago
In Melbourne, this is totally normal. Everyone stands in the street, prospective buyers, neighbours, and people starting their house search. The estate agent stands on the front step, acting as the auctioneer, using the rolled up "Section 32" document like a gavel. Typically the auctioneer draws out bids in $10-20k increments, then knocks it down with a "going once, going twice, going three times..." call. Just before declaring it sold, the agent normally stops, goes inside to consult with the vendor, and if the price is above their reserve price, goes back outside and says "the house is now on the market". Now the auction gets serious... Usually another couple of bidders reveal themselves at this stage. The increments can drop to $1k. If there is a battle between the last two or three bidders, the final price can go up another $50-100k or so. Eventually the final bid is locked in with a final call of "going once, going twice, going three times, to the man in the blue shirt." The winning bidder goes inside with the estate agent, hands over a cheque for 10% of the purchase price, signs the contract part of the Section 32 statement, and is then committed to pay the balance in 60 or 90 days. Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out. I bought my house like this, and sold it again 20 years later the same way. It's a totally predictable, well regulated, very transparent process. The weekend auction results are all published on Monday morning, both for every house, and the aggregate "clearance rates" for sold versus "passed in". This is so unlike UK, where each sale has a chain of buyers, all "subject to finance", and no certainty or speed!
- bitshiftfaced 5y ago
  > Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out. In the states, once the purchase agreement is signed, the home goes through inspection at some point before the sale. The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint.
  - chasd00 5y ago
    > The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint. But that’s a very well known risk. An agent will have a whole checklist of things to look at before putting a house on the market to minimize that risk. Also, buyers lose at least some money if they back out, there’s a nominal sum put up that you don’t get back if you decide to not buy once the process is started.
    - cpwright 5y ago
      In my NY suburb, you do the inspection before the contract is signed. No money has yet changed hands, and it can be a point of negotiation or just walking away.
      - FireBeyond 4y ago
        That gets expensive at $400-800 inspection fees for any house you want to put an offer on.
  - TimPC 5y ago
    In Canada this is called conditional on inspection and it’s a permitted clause in a sale. The problem is the minute you have multiple buyers there is overwhelming pressure to remove conditions that can make the sale fall through because the seller is more likely to take an offer that gives them a guaranteed sale.
  - alistairSH 5y ago
    This is only possible in a slow market. Right now, in DC metro, all contingencies are being waived, bids are $100k+ over list on moderately priced homes, and the seller is demanding a 2-month free "rent" back from the buyer. Both my home purchases have waived inspection. The second waived financing contingencies as well. This isn't uncommon, based on what friends and family have done.
    - bitshiftfaced 5y ago
- fratlas 5y ago
  A designed process, very efficient at extracting the maximum price out of a stressful situation. It's a sad state of affairs in Australia right now.
  - alistairSH 5y ago
    But it's an open process. That it's close to optimal efficiency isn't a bad thing. Imagine the same level of stress, but you have to guess what the other buyers are bidding. Do you bid low and hope everybody else does? Bid high, but risk overpaying?
    - fratlas 5y ago
      There are new systems to bid online, and over the course of a week. Much less stressful, no emotion and heat of the moment bidding. Nothing wrong with open bidding, all about the techniques used in person.
      - alistairSH 5y ago
        That still suffers from the stress at the end of the week. Say an auction closes at 5pm Friday... I bod $500k on Wednesday. Somebody bids $501 Friday 4:50. I bid 502... they 503, right up to the last moment. And if the site is like some online car auctions, any activity in the last 5 minutes extends the auction by another 5 minutes. So, 504... 505... and on up until somebody walks away. A home purchase is the largest single thing most people will ever buy. It's going to be emotional, even if the buyer manages to stay calm.
        fratlas 4y ago
        In my experience it was less emotional than in person auctions I've attended. I knew my limit and stuck to it, there was no agent talking me into bidding higher.
    - hallway_monitor 5y ago
      That's what I was thinking. In theory it should be a better system. Submitting a bid significantly over the asking price and then losing to another higher secret bid is very disheartening.
- switch007 5y ago
  I got stressed just reading that. Can’t imagine living it!
- InCityDreams 5y ago
  Specifying "No chain" sold my house in the uk real, real fast. / there are exceptions.
- Mandatum 4y ago
  > It's a totally predictable, well regulated, very transparent process. No it's not. - Ghost bidders and staff posing as buyers on auction day aren't uncommon with smaller outfits. - They can list the property at a range of say 1-1.2M but the reserve on the property might be 1.5M. They waste everyone's time doing this, and you don't know until auction day - and that's only IF the property meets it. - They will negotiate with buyers after hammer down, technically the "right to negotiate" goes to the highest bidder - however there's no laws, and I've seen every single agency in Melbourne do this - will go around and gauge what people are willing to go up to. They'll then instruct the vendor to accept/not accept an amount. This is why they have multiple staff on auction day.
alistairSH 5y ago
It actually does happen in the US, but the only place I've seen it is bank or county/town auctions, where the house was either taken by the bank for non-payment or taken by the town to cover past taxes.

stevesimmons 5y ago

In Melbourne, this is totally normal. Everyone stands in the street, prospective buyers, neighbours, and people starting their house search. The estate agent stands on the front step, acting as the auctioneer, using the rolled up "Section 32" document like a gavel. Typically the auctioneer draws out bids in $10-20k increments, then knocks it down with a "going once, going twice, going three times..." call. Just before declaring it sold, the agent normally stops, goes inside to consult with the vendor, and if the price is above their reserve price, goes back outside and says "the house is now on the market". Now the auction gets serious... Usually another couple of bidders reveal themselves at this stage. The increments can drop to $1k. If there is a battle between the last two or three bidders, the final price can go up another $50-100k or so. Eventually the final bid is locked in with a final call of "going once, going twice, going three times, to the man in the blue shirt." The winning bidder goes inside with the estate agent, hands over a cheque for 10% of the purchase price, signs the contract part of the Section 32 statement, and is then committed to pay the balance in 60 or 90 days. Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out. I bought my house like this, and sold it again 20 years later the same way. It's a totally predictable, well regulated, very transparent process. The weekend auction results are all published on Monday morning, both for every house, and the aggregate "clearance rates" for sold versus "passed in". This is so unlike UK, where each sale has a chain of buyers, all "subject to finance", and no certainty or speed!

bitshiftfaced 5y ago
> Sales almost never fall through. If the buyer cannot get financing etc, the seller keeps their 10% deposit. The seller cannot back out. In the states, once the purchase agreement is signed, the home goes through inspection at some point before the sale. The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint.
- chasd00 5y ago
  > The inspector finds a hundred little problems with the house, and the buyer can back out of the sale for any little complaint. But that’s a very well known risk. An agent will have a whole checklist of things to look at before putting a house on the market to minimize that risk. Also, buyers lose at least some money if they back out, there’s a nominal sum put up that you don’t get back if you decide to not buy once the process is started.
  - cpwright 5y ago
    In my NY suburb, you do the inspection before the contract is signed. No money has yet changed hands, and it can be a point of negotiation or just walking away.
    - FireBeyond 4y ago
      That gets expensive at $400-800 inspection fees for any house you want to put an offer on.
- TimPC 5y ago
  In Canada this is called conditional on inspection and it’s a permitted clause in a sale. The problem is the minute you have multiple buyers there is overwhelming pressure to remove conditions that can make the sale fall through because the seller is more likely to take an offer that gives them a guaranteed sale.
- alistairSH 5y ago
  This is only possible in a slow market. Right now, in DC metro, all contingencies are being waived, bids are $100k+ over list on moderately priced homes, and the seller is demanding a 2-month free "rent" back from the buyer. Both my home purchases have waived inspection. The second waived financing contingencies as well. This isn't uncommon, based on what friends and family have done.
  - bitshiftfaced 5y ago
fratlas 5y ago
A designed process, very efficient at extracting the maximum price out of a stressful situation. It's a sad state of affairs in Australia right now.
- alistairSH 5y ago
  But it's an open process. That it's close to optimal efficiency isn't a bad thing. Imagine the same level of stress, but you have to guess what the other buyers are bidding. Do you bid low and hope everybody else does? Bid high, but risk overpaying?
  - fratlas 5y ago
    There are new systems to bid online, and over the course of a week. Much less stressful, no emotion and heat of the moment bidding. Nothing wrong with open bidding, all about the techniques used in person.
    - alistairSH 5y ago
      That still suffers from the stress at the end of the week. Say an auction closes at 5pm Friday... I bod $500k on Wednesday. Somebody bids $501 Friday 4:50. I bid 502... they 503, right up to the last moment. And if the site is like some online car auctions, any activity in the last 5 minutes extends the auction by another 5 minutes. So, 504... 505... and on up until somebody walks away. A home purchase is the largest single thing most people will ever buy. It's going to be emotional, even if the buyer manages to stay calm.
      - fratlas 4y ago
        In my experience it was less emotional than in person auctions I've attended. I knew my limit and stuck to it, there was no agent talking me into bidding higher.
  - hallway_monitor 5y ago
    That's what I was thinking. In theory it should be a better system. Submitting a bid significantly over the asking price and then losing to another higher secret bid is very disheartening.
switch007 5y ago
I got stressed just reading that. Can’t imagine living it!
InCityDreams 5y ago
Specifying "No chain" sold my house in the uk real, real fast. / there are exceptions.
Mandatum 4y ago
> It's a totally predictable, well regulated, very transparent process. No it's not. - Ghost bidders and staff posing as buyers on auction day aren't uncommon with smaller outfits. - They can list the property at a range of say 1-1.2M but the reserve on the property might be 1.5M. They waste everyone's time doing this, and you don't know until auction day - and that's only IF the property meets it. - They will negotiate with buyers after hammer down, technically the "right to negotiate" goes to the highest bidder - however there's no laws, and I've seen every single agency in Melbourne do this - will go around and gauge what people are willing to go up to. They'll then instruct the vendor to accept/not accept an amount. This is why they have multiple staff on auction day.

alistairSH 5y ago

It actually does happen in the US, but the only place I've seen it is bank or county/town auctions, where the house was either taken by the bank for non-payment or taken by the town to cover past taxes.