How to make and negotiate a pre-auction offer?

Hi all


Can anyone please share tips on how to make a successful pre-auction offer?

Obviously making a high offer bring the most chance of success, but I'm asking about the specifics of how an offer should be made, what conditions I should place, and what deadlines for a response I should give.

For example, is it a good idea to call the agent on a Monday morning following previous Saturday's open inspection, and submitting an offer in writing (via e-mail) and asking them to decide in 24 hours - and if accepted then exchange contracts via each party's solicitor?

Or should I contact my solicitor first and make a formal offer with a contract, and ask the vendor to decide and send a signed contract back by a certain time (e.g. by close of business that day, or in 24 hours from when the offer was made?)

6-7 years ago we made an offer for an apartment in writing via e-mail (private treaty, not auction), which was accepted within an hour. But shortly after the agent rang my wife to see if she would be willing to better offer. In retrospect I think the offer should have been made by sending a signed contract and giving them a short deadline to exchange contracts to make it legally binding. We ended up buying another apartment and it was the best thing we did because we sold it after 6 years for 240K more than we paid, whereas a similar apartment in the same block to the one we originally made an offer on sold for 60K more than we paid.

Should I also make a point of saying that should my offer be rejected, then I won't be at the auction as I will keep making more pre-auction offers on other properties until one is accepted?

If you could share some tips that would be greatly appreciated.

 

The hard part would be getting the vendor to accept.

will you offer with 66w and unconditional? The offer deadline is to create urgency to the seller, but with crazy clearence rates, over the top prices. Why wouldnt a seller take a chance with an auction?

 

Yes a 66W.

Good point about the current market being a vendor's market, but last Saturday 150 properties were sold prior to auction, out of 470 sold.

Source: Sydney Real Estate Auction Results - Domain

 

In the current Sydney market (given the current conditions and results) it will likely need to be reasonably strong to convince the vendor to not go to auction.

Definitely a 66W, definitely a deadline and with detailed recent comparable sales supporting your offer and why it’s a fair one.

Not every property is lighting up at auction and going bananas, and if you’ve been to the opens and spoken to the agent you’ll be able to gauge interest. With any luck it might be a property without too many (or any) strong buyers on it and the agent may encourage your offer to their vendor. Best of luck!

- Paul

 

Just to share my recent experience. Yesterday I was in a race with another buyer (only other interested party) on an off-market sale which the (very private) vendor wanted to conclude asap.

My buyers agent had viewed the property, we’d sounded out the vendor’s sale price expectations, arranged a pest & building inspection and were about to provide a signed contract at asking price with 66W that same day. We were beaten by the other buyer who turned up at the agent’s office, without having viewed the property and not having arranged their own P&B report, offering full asking price, 10% deposit cheque attached to signed contract with 66W.

Crazy stuff.

 

Thanks I will need to attend a few opens and gauge the interest level, and only make the move if I suspect the vendor might be tempted by a decent offer, one that I think might be a little less than what an auction might achieve.

But most of all I'm trying to save time, because 4-week auction campaigns mean that I can only really have a shot at making the purchase I want every month or so, whereas by making an offer I can then move onto the next property if it's turned down.

 

Thanks for sharing.

But at the same time, I've seen many properties sell prior to auction in the past 6 weeks or so in the area I'm watching, where the price was below what I thought it would achieve at auction.