Can you hold a conditional auction?
Well, yes, but why would you want to?
Every auction is different, at times, we are running high with multiple registered bidders and at other times, we are dealing with a crowd of conditional or ’non auction’ buyers. It's paramount to recognise that the reason we have buyers wanting to purchase is due to the deadline that the auction process dictates, without it, we would have little structure to the desired timeline.
An auction buyer or what we often refer to as a ‘cash buyer’ can act swiftly, often without the inclusion of bank approval and on many occasions, limited other conditions that could net be fulfilled by auction day such as a building and pest inspection or similar. Conversely, the conditional buyer is not afforded the same transactional agility. Whilst the finance landscape is changing and again favouring our buyers, there are still hoops that must be jumped through and various issued to be navigated. If a conditional buyer discovers the property early in the campaign, it is entirely feasible that all matters including bank finance and bidding approval may be in place before auction day. In the event that a keen buyer has not been able to gain approval to bid with guaranteed finance, it can stay auction proceedings at times or leave them feeling like second class buyers as the cashed up purchasers fight it out. Most vendors will negotiate to secure an unconditional contract rather than endure the uncertain wait on the conditional buyer.
This brings us to the quandary of a property that has attracted only conditional buyers and this can happen intermittently. It needn’t be ‘game over’ for the auction process in fact, far from it. I have been the appointed auctioneer on enough conditional auctions to know that as a plan ‘B’, it can still yield a favourable result. What we recognise in this scenario is that whilst conditions remain, the most powerful friend to best results also exists - competition. Simply, the cooling off period can be removed, a strict condition offered to all buyers can be announced ands the auction can proceed. For example, the vendor may allow the agent and auctioneer to afford all parties a 7 day finance or building and pest inspection as part of the contract. In this case, buyers still benefit from a transparent process that can prove a fair market value with willing buyers and secure the property.
It’s not a text book auction but still benefits from urgency, competition and social proof.