Compliance may not be regarded as the most interesting topic in the real estate industry, but there are few more important issues when it comes to auction day preparation.
In a recent REINSW webinar, three expert auctioneers – Mark Morrison, Ricky Briggs and Jesse Davidson – delivered an in-depth guide on how to run a successful and compliant auction campaign offering the best outcomes for your clients. The panel worked through the auction process by discussing some of the key forms an agent needs to understand and the best measures to avoid any possibility of a sale being rescinded.
“It’s like putting a seatbelt on in a car,” Davidson says about compliance. “In real estate particularly, you need to ensure that you’re doing things right, to make sure you’re not risking any of that potential revenue.”
Day-to-day compliance in the lead-up to auction
Agents can’t afford to lose any buyers in the current market, but there are various scenarios where a serious buyer might not be able to attend an auction. For these situations, Davidson asks what agents should to do to remain “above board” and “most importantly still allow that buyer to bid at the auction?”
“It’s such a simple question, yet still so many people get it wrong,” Briggs responds. “If they (the buyer) cannot make the auction itself, there are a number of different authorities that stipulate what a purchaser can and can’t do in their respective place.
“So naturally what we’re seeing at the moment is a bidding authority for a person via phone. What happens if the phone cuts out? What happens if they’ve given a limit beforehand? There are all sorts of different legalities that you step into.”
What is required to register a bid over the phone at a residential auction? “Effectively it’s an authority form to bid over the telephone,” Davidson says.
“There’s a form which the bidder’s driver’s licence still needs to be attached to; you still need a copy of that,” Briggs adds. “But what happens if you’re mid-auction and there’s a bidder over the phone? You’ve got to know, as the agent, that you’re comfortable to register that person and that you’ve physically met them.”
Corporate and commercial auctions
In the corporate and commercial space, what happens when an agent turns up to bid on behalf of a company? “Again, there are so many different scenarios, it’s not simple anymore,” says Morrison. “It’s having all the paperwork with you, all that information with the authority from the company saying that you can bid on that company’s behalf.”
In order to bid for a company you will need their:
- Address; and
- Solicitor’s details
“It sounds like a really simple question, but when they’re doing the registration that’s why you’ve got to ask, ‘are you bidding on behalf of yourself today?’,” Morrison adds.
“It’s the agent’s job to educate the buyers – so it’s a good idea to put together a simple pre-auction checklist to send to every enquiring party taking a contract or showing good-quality interest,” Davidson says.
“Come auction day it’s then a seamless process, and all the best agencies that do it consistently have got these systems in place so that this (failure to comply) doesn’t happen.”
The pre-auction checklist might include the following questions:
- Have you checked your contract?
- Has your solicitor checked the contract?
- Have you got your driver’s licence?
- Have you worked out what entity you’re purchasing under?
To learn more about running a successful and compliant auction campaign – including analysis of issues arising from a recent auction compliance case – watch the Webinar: Auction day preparation and compliance
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