Making an offer before auction for Randwick unit

Hello.

I'm considering making an offer for what would be a PPOR, before it goes to auction, but am struggling as to what amount would be realistic. 1 bed, 1 bath, 0 parking, 49sqm.

If filtering Domain/Real Estate for price, the sales agent has listed it at $475k.

It last sold in 2012 for $470k. (Unimproved, looks like original kitchen & bath).

The most recent sale in the building was for the unit above, same layout, but top floor, in 2014 for $650k. (Renovated to decent, but not high spec.)

I can't really figure out what the threshold for underquoting is, but this CHOICE article indicates a quarter of properties go for over 10% of guide price.

I'm guessing the owner would expect more than $5k after 8 years of price increases. But there's quite a range between $475k and $650k. Any advice/opinions?

 

If you want it you'd have to make an offer strong enough to make the vendor accept it and take it off the market. Does it have a balcony and which direction does the apartment face and is it in a quiet location? Are the strata fees reasonable? Is the building well maintained? 49sqm isn't big but ok for a 1 bedder. The lack of parking will also bring the prices down. You could also wait till auction, there's a chance no one else wants to buy it, giving you full control.

 

From 2012 to now would almost be the whole boom. Even at 650k, the growth is terrible compared to the wider sydney market.

is this really such a good idea?

 

Thanks for the responses to my question about whether to submit a pre-auction offer and for how much. Sounds like a couple of you are recommending waiting until auction.

As for the other asides: I like the location and that price range, even without growth, provides me enough lifestyle value to make it worthwhile. And yes, north-facing with a small balcony. Strata fees in line with the neighbourhood/type of block.

I was leaning towards putting in a pre-auction offer, but now am on the fence. Any other perspectives would be welcome.

 

What signals are you getting from the agent?
How much interest is there in the property?
How many people are at the opens? Are they serious buyers?
How many people have purchased a strata report/ requested contract changes?
Has there been any offers? If so, what were they?
What is the vendors story/ position? How motivated are they?
How far into the campaign is the property and when is the auction date?- Too early and they wont look at offers, too late and they may as well wait until auction if enough buyers- Week 3 is usually when properties trade pre-auction
Does your budget put you in a strong or weak position to buy the property?

These are just a few of the questions I ask when considering a pre auction offer.

As mentioned, any offer would need to be unconditional with a signed 66W.

Is the property a studio? As quality 1 bedroom apartments in the area sell for around $750K.

 

....and get prepared to fight out a dutch auction if you go with a pre auction offer. If enough interest in the property it will simply trigger an auction before the auction (via phone, text or email) where you will have zero transparency of what's going on, unlike a traditional auction where you can see each bid. You need to have strong pricing guardrails in place if you go down this path.

 

The agent will have a price in mind. Surely you have a expectation of what this property may sell for. Nobody cares what it last sold for and recent sales need to be recent - Like in the past few months. Its what it will sell for now. At auction there will be a reserve but that wont be set now. A pre-auction offer could help set a reserve. But if you are the sole biddder..... Unrealistic

Have you considered having a inspection or getting a val ?

 

The agent should be your starting point as to the vendor's expectations. What are they quoting as a guide? If they don't provide a guide then they should give you some comparables which will be a good insight into what they are looking for. Just from what you said, I would expect this unit to be more than $700k.

 

yeah... the $475k in the backend web interface is only to lure people in, then it looks like the property is super popular but some people will probably know it's worth $650k or more, they'll be the eventual owners.

 

Love it @fols! Really appreciate the specific and pointy feedback

And Mel, will add the question about comparable to the handy list provided by Fols.

Which would be why I'm trying to suss out what a reasonable offer could look like. Based on having observed this specific area closely for the last 6 months, I don't believe it'll sell for less than $500k or much over $650k. But that's a bit of a range that I'd like to narrow down. Bank will be sending me RP Data valuation soon, let's see if that helps.

 

It's really easy to get agent's price guide, if you haven't already, just go to the domain ad, click email agent - tick price guide and hit sent.

But yes, as others have suggested - just ring the agent and ask the price range that vendor might consider to bring get it taken off pre-auction.

475k does sound very low for Randwick (I am following eastern suburb market too).