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In Melbourne, this is totally normal. Everyone stands in the street, prospective buyers, neighbours, and people starting their house search. The estate agent st

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 4y 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 4y 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 4y 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 4y 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 4y 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 4y ago
    I wouldn't say a "slow market." I'd say a "normal market." The market right now is anything but normal.
  - joejerryronnie 4y ago
    You can still back out of the deal but you will typically forfeit your deposit or earnest money (sometimes in the $10’s of thousands). But I hear you with the seller’s market - we just purchased a couple homes in the Austin area, bid significantly over asking price, waived all contingencies, and offered free 2-month rent back.
    - TomVDB 4y ago
      I discussed this with our realtor: forfeiting your full 3% earnest deposit is apparently rare. It’s not automatic, and when somebody backs out due to a non-contingent reason, it’s usually for a fraction of the full earnest deposit. (At least, that’s for the SF Bay Area.)
      - skeeter2020 4y ago
        in really hot markets the seller often does BETTER if someone backs out and they move on to the next set of buyers. It's not worth the trouble to try and collect, which is not a gimme. The deposit is not a formula but more convention and an amount that demonstrates good faith. You want to get back on the market and not mess around to maybe capture 5 grand gross.
      - joejerryronnie 4y ago
- folkrav 4y ago
  In Canada inspection contingencies only protect the buyer for major problems, and definitely aren't a "get out of jail free" card... I haven't seen anyone be able to back out after inspection in the last handful of years. Hell, we're having trouble even getting an inspection contingency to stick as people are more and more often foregoing that in hopes of getting their bid in.
  - skeeter2020 4y ago
    Only time I ever used this was a wood foundation was found on inspection for a home we conditionally purchased listed as a concrete foundation. There was nothing wrong with it based on the inspection but I wasn't comfortable so we backed out. Every other case we've used the inspection to get concessions on mechanicals and roofs that needed replacing but I don't think we'd get the inspection or price reduction on an offer today.
- skeeter2020 4y ago
  As a buyer, you can try and write whatever contingencies you want into a purchase contract. In supplier markets like most right now they'll just refuse them. In a slower market where "simple" purchases are not so typical, offers with few or no conditions are often the difference maker, or even worth a slightly lower offer price to the seller. Even with a conditional home inspection "a hundred little things" typically won't disqualify the deal; the inspector will be looking for larger single issues that are up closer to 1% of the price. In reality sales don't often fall through unless something is extremely major or misrepresented; the inspection is used by the buyer to promote price concessions and help them deal with the stress of such a massive purchase. Inspectors miss important stuff all the time, which isn't surprising when they're spending only a few hours for an entire home.
fratlas 4y 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 4y 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 4y 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 4y 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 4y 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 4y ago
I got stressed just reading that. Can’t imagine living it!
InCityDreams 4y 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.

bitshiftfaced 4y 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 4y 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 4y 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 4y 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 4y 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 4y ago
  I wouldn't say a "slow market." I'd say a "normal market." The market right now is anything but normal.
- joejerryronnie 4y ago
  You can still back out of the deal but you will typically forfeit your deposit or earnest money (sometimes in the $10’s of thousands). But I hear you with the seller’s market - we just purchased a couple homes in the Austin area, bid significantly over asking price, waived all contingencies, and offered free 2-month rent back.
  - TomVDB 4y ago
    I discussed this with our realtor: forfeiting your full 3% earnest deposit is apparently rare. It’s not automatic, and when somebody backs out due to a non-contingent reason, it’s usually for a fraction of the full earnest deposit. (At least, that’s for the SF Bay Area.)
    - skeeter2020 4y ago
      in really hot markets the seller often does BETTER if someone backs out and they move on to the next set of buyers. It's not worth the trouble to try and collect, which is not a gimme. The deposit is not a formula but more convention and an amount that demonstrates good faith. You want to get back on the market and not mess around to maybe capture 5 grand gross.
    - joejerryronnie 4y ago
folkrav 4y ago
In Canada inspection contingencies only protect the buyer for major problems, and definitely aren't a "get out of jail free" card... I haven't seen anyone be able to back out after inspection in the last handful of years. Hell, we're having trouble even getting an inspection contingency to stick as people are more and more often foregoing that in hopes of getting their bid in.
- skeeter2020 4y ago
  Only time I ever used this was a wood foundation was found on inspection for a home we conditionally purchased listed as a concrete foundation. There was nothing wrong with it based on the inspection but I wasn't comfortable so we backed out. Every other case we've used the inspection to get concessions on mechanicals and roofs that needed replacing but I don't think we'd get the inspection or price reduction on an offer today.
skeeter2020 4y ago
As a buyer, you can try and write whatever contingencies you want into a purchase contract. In supplier markets like most right now they'll just refuse them. In a slower market where "simple" purchases are not so typical, offers with few or no conditions are often the difference maker, or even worth a slightly lower offer price to the seller. Even with a conditional home inspection "a hundred little things" typically won't disqualify the deal; the inspector will be looking for larger single issues that are up closer to 1% of the price. In reality sales don't often fall through unless something is extremely major or misrepresented; the inspection is used by the buyer to promote price concessions and help them deal with the stress of such a massive purchase. Inspectors miss important stuff all the time, which isn't surprising when they're spending only a few hours for an entire home.

fratlas 4y 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 4y 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 4y 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 4y 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 4y 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 4y ago

I got stressed just reading that. Can’t imagine living it!

InCityDreams 4y 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.