The birth of online auctions has transformed the way people buy and sell goods. By removing physical limitations, such as time and distance, people can now log on to their mobile devices and computers to conduct a transaction.
This convenience has extended far beyond the world of eBay and into the real estate industry, with people participating in auctions from the comfort of their home.
What is an online auction?
An online auction is conducted over the Internet and delivered through a livestream or web-based platform – buyers participate in the bidding through digital means, rather than being at a physical location.
The format of the online auction depends greatly on the platform or company facilitating the sale. There are a variety of companies offering online real estate auctions, including Gavl, Market Buy, Realtair (previously known as AuctionNow) and Openn.
Regardless of the platform used, to be classed as an online property auction, it must operate under the same legal framework as a traditional real estate auction. So, an auctioneer is required, there is no cooling-off period, and the bidding process is transparent.
The Openn platform supports several traditional sales methods (like auction and private treaty), however has added a transparent digital medium for making and receiving offers, and for managing competing bids. The platform’s online auction process is known as Openn Negotiation.
What is Openn Negotiation?
An Openn Negotiation is conducted entirely online, where only pre-contracted buyers can start bidding on a property from day one.
The leading bid can be shown on all real estate advertising portals – even if it is lower than what the seller wants.
The sales process is very flexible as vendors can choose to allow buyers with conditions to participate and bring the final bidding stage forward to sell the property quickly.
All bids are binding and the highest unchallenged bid above reserve wins. So, once the virtual hammer has fallen, the auctioneer has the authority to sign the final contract and complete the sale.
Unlike a traditional auction, where all efforts of the sales campaign culminate on one day, an Openn Negotiation allows bids to be made and recorded from day one. The evidence-based process helps vendors and buyers find the best market price under competitive tension – often in less than 30 days.
How does an online auction work?
For online auctions conducted through a web-based platform, the basic steps are similar. Buyers complete a qualification process, submit bids via digital means and compete until the property either meets reserve or passes in.
Here’s the steps involved in participating in a Openn Negotiation online real estate auction:
1. Submit an opening bid and get qualified
Interested buyers find the property they’re interested in on Openn and enter a starting price. They will be asked to complete terms for the owner’s consideration, which can include level of deposit, settlement date, and any other terms that can be flexible. Once the vendor agrees to your terms, the pending price becomes live on the property, and the buyer is allocated a unique paddle number, making them qualified.
2. Compete further and track the negotiation
Once qualified, buyers can see the paddles representing other qualified buyers, the current highest bid, the final bidding stage date and a bidding timeline. They can improve their price at any time or sit tight for the final stage. Buyers can track the bidding through real-time updates, via SMS or email – always keeping them in the loop.
3. Bid before the clock runs out
If there is enough buyer interest, the agent may elect to bring the final bidding stage forward, which wraps up the online auction and brings negotiations to a close. Under a countdown timer, buyers decide if they wish to continue bidding. Each time someone improves their bid, or the bid increment is adjusted by the agent, the countdown timer resets. This gives competing buyers time to place another bid. The agent can pause the negotiation at any time to speak with the seller or another buyer.
4. Finalise the sale
If the property hits reserve and no other bids are placed, then once the clock runs out, the virtual hammer falls and the property is awarded to the highest bidder. The auctioneer transfers the winning buyers’ specific terms to the final contract and executes on their behalf. If the property has not met reserve, then the property is passed in and the agent can continue negotiations.
Key benefits of Openn Negotiation
- More transparency – qualified buyers can see what is happening throughout the entire process, including their competitors' bids. This avoids the scenario, "I would have paid more, if I'd known what the property was going to sell for".
- Keeps you updated – stay informed by tracking negotiations 24/7 and getting notified when a new bid is placed.
- Bid anytime, anywhere – online auctions give you the power to buy and sell property from the palm of your hand, from anywhere in the world.
- More opportunity to participate – attracts a wider buying pool by allowing interstate and international buyers to qualify, as well as conditional buyers.