Melbourne is experiencing an unprecedented second COVID-19 lockdown. Selling a property in Melbourne today has reverted to online auctions and property inspections by virtual appointment only. In the first lockdown, online selling has proven to be successful. Will it work again in the second lockdown? Let’s go through what you will need to know about an online auction in Melbourne.
What You Need to Know About Online Auction Trends in the Second Lockdown
Second lockdown online auction in Melbourne trends reflect the first lockdown. But there is a silver lining this time around. Here’s what we mean:
1. Withdrawn properties are fewer than the first lockdown
The early weeks of the first lockdown saw an increase in properties withdrawing from planned auctions. Increased in withdrawn property is not unexpected because of the unusual circumstances we are experiencing.
In the first lockdown, real estate agents and auctioneers were forced to pivot to untested virtual selling. Vendors at the time were less willing to test online auction resulting in a large number withdrawing their properties from the market.
Back in the first lockdown, Melbourne, withdrawn properties peaked at 64.7% recorded on the week ending 12th April. This time around, the rate of withdrawn properties is only 42% (as at 19th July). The smaller number could be attributed to the fact that online auctions have proven to be successful in selling homes during a pandemic.
2. Clearance rates and volumes have dropped but sales remain strong
Clearance rates and volumes are directly affected by properties withdrawal. The more withdrawals, the lower the clearance rates and volumes.
Despite this drop, property sales in Melbourne are stable in the second lockdown. Melbourne property market is recording higher sales compared to the same period in the first lockdown.
Up to 23.4% properties were sold ‘under the hammer’ (week ending 19th July) compared to only 9.2% properties sold in the first lockdown (week ending 29th March). This is because real estate agents are better prepared in managing online home sales than they were in the first lockdown.
Also, online auctions in Melbourne are still the most effective way to sell a property. The number of properties sold ‘under the hammer’ (i.e. sold at auction) is still higher than properties sold prior or after the auction (See Chart 1 below).
3. Properties are selling better in the second lockdown
In the first lockdown, real estate agents were caught unawares. No one anticipated that the virus would become so ubiquitous that governments all over the world had to shut their economies to protect lives.
Despite the high levels of uncertainty of a second lockdown, the negative shocks to auctions are not as severe this time because the real estate industry are better prepared to sell properties virtually.
Frequently asked questions about online auctions
Thinking of selling your property through an online auction in Melbourne? We ask the team at Our Local Agent to answer some frequently asked questions about online auctions:
How do I register to bid in an online auction?
The registration process is simple. Buyers or bidders register interest by creating an account on the online auction platform. They will need to submit their identification and credit card details. The registration is approved by the property’s listing agent. The bidder will be required to pay a fully refundable deposit between $1,500 to $2,500.
- How do I participate in an online auction?
Once you have registered, you will be sent a link to participate in the live stream. You can access the auction via any digital medium whether it’s a mobile phone, a handheld device, or a laptop.
- How are contracts handled in an online auction?
Some platforms provide an online contract that the successful bidder can sign. If there are no online options, the listing agent will contact the buyer.
- What are the common online platforms agents use?
- Can I trust online auction platforms?
Online auction platforms today are transparent and legally compliant. Prospective bidders have to complete a simple but rigorous registration process that includes identity verification and fraud check. This can minimise false bidding.
- Can I view an auction if I am not bidding?
You can watch a live auction using the Gavl or Auction Now apps, but you will have to create a profile by submitting your name, address, and a phone number.
- What is the difference between a live stream and a genuine time auction?
In a live stream auction, bidders register from a remote location (i.e. laptops, iPhones, Android, iPads, and so forth). Bidders must be pre-approved before they can participate in the auction.
The auctioneer can accept or decline a bid. Communication is via the website and bidders can see the auctioneer.
The property is sold if it meets or exceeds the reserve price. If it doesn’t sell, the auctioneer will contact the highest bidder to negotiate a price.
Genuine-time online auctions, on the other hand, is auction as it happens but in a virtual format. The auctioneer oversees the entire auction in real-time from start to finish.
Similar to a traditional auction, the auctioneer may set minimum bid increments, announce the winning minutes and at one minute to go, if someone else bids will extend the auction by another five minutes to give other bidders a chance to counter-offer. The successful sale is wrapped up digitally.
Selling your property in the pandemic even as Melbourne is going through a second wave of lockdown is not impossible. Private inspections and online auctions are some of the ways that have worked in these challenging times.
Vendors can take comfort in the knowledge that the real estate industry in Melbourne is prepared and ready to take on the challenges of selling a property during these challenging times.
If you are planning to list your property now, the best advice we can give you is to use the services of a local real estate agent who is familiar with your area.
Selling in Keysborough, Noble Park or neighbouring suburbs? Contact Our Local Agent here.