Need Advice on Property Going to Auction

Discussion in 'The Buying & Selling Process' started by EvaK, 25th Apr, 2018.

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  1. EvaK

    EvaK New Member

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    25th Apr, 2018
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    Sydney
    Hi All,
    Been a long time follower but first time posting.
    I am in the middle of purchasing a property and need your help with a creative yet cheap solution.
    The situation basically is a property was listed for auction with a price guide of $650k (it's in Sydney), it is a bit of a rare find because it's a super large 1 bedder - 175sqm due to being ground floor and courtyard on title, even has a second living room (has a window so it can potentially be converted to a second room (subject to council and strata approval) and also a study room (no windows).
    Given the Sydney market has been slow and the auction clearance rates are low, I went in with a pre-auction offer after being the only person to turn up to the open house on the weekend before the auction (this Saturday) initially the agent said the sellers had offers around the 710 - 730k mark which I told him it was too much so I won't waste his time, of course he calls back and says he spoke to the other buyers and they are interested but not that interested and told me to put an offer forward as by law he has to submit all offers to the seller. I offered $680k via email, a day later no news, so I called and he said sellers rejected it straight away because other people have offered that price and he would just take it to auction, I asked him how much are they looking at, he said 710 - 730k - again saying there's another buyer, I said.. well has the other buyer signed anything or put in an proper offer he said no but will within the next couple of days, it sounded like bluff to me, so I gave him a final offer of $700k..but also asked him when I'll hear back because i don't appreciate him not telling me straight away and waiting a day if the sellers said no to my initial offer.
    He then claimed he had issues contacting the seller but kept calling to keep me updated so I won't think he is playing games.

    My questions are:
    1. Now that he knows sellers rejected 700k, he has kept the price guide at 650k - is that legal? Shouldn't he have to contact all interested parties to revise the guide?
    2. Any suggestions/creative ideas to scare away any potential buyers to go to the auction? A lot of them might go (he said before the inspection I went to there were 70 interested parties who inspected the property, I am aware that another party has purchased the strata report as I went into the strata management company to do a final check of meeting minutes and there was a record of someone else purchasing a report last week for the same unit.

    I really want this property and my maximum is $715k (but agent was such a J**k I didn't want to offer that as the seller just said no to my 700k offer no counter offer or anything else.

    My hope is I am the only one at auction and who knows.. I might get it for under 700k but I just want to do whatever I can to scare away other buyers (if there's any!).

    I am happy to offer everyone free lunch if you all can turn up to the auction and make no room for legit buyers to come in HA!… ok that is a silly idea!

    Any suggestions/recommendations appreciated, auction is this weekend.
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    There's no such thing as a free lunch :rolleyes:

    Doesn't stop preregistered phone bidders. :(
     
  3. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Hope is not a strategy. Nothing you have described so far about how you have handled the situation gives me any confidence that you will be the successful purchaser.

    I’d suggest you hire a buyers agent to do the negotiating and auction bidding for you. ( I know that may come across as biased but you are running out of time and it’s impossible to train / coach someone quickly).
     
    JacM likes this.
  4. EvaK

    EvaK New Member

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    Any what would a buyers agent be able to do at this point? I know my maximum and there is no idea who else is going to be there.. there might be a crazy person willing to offer 800k.. you never know, why would I want to pay an agent 000's of dollars to hold up a sign for me at auction?
     
  5. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Look it’s your call and your money and it was just a suggestion. Most decent BAs can have an ‘agent to agent’ talk and find out how many registered bidders there are likely to be and what the agent thinks they are prepared to pay. They can also find out most times what the reserve will be and whether or not there is an opportunity to buy prior and for how much.

    BAs are not emotionally invested like you are and because they do this all the time can get a better handle on it than you may be able to. Many only charge $550 attendance fee + a $550 success fee. If you think $1,100 is too much then have a crack at the auction yourself. To my mind (biased as I admitted before) a BA in this case is good value if he/she gets the property for you.
     
    JacM, Jacque and hobartchic like this.
  6. housechopper2

    housechopper2 Well-Known Member

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    Sounds like a typical REA trying to get the best price for the vendor (don't blame him, they work for the vendor).

    If your offer was unconditional I would definitely be asking him to update the price on the internet. it's definitely misleading to list it below an unconditional offer $50k higher.

    It also doesn't sound like they are willing to sell before auction at the level you are offering.

    At this stage you should prepare for auction and seriously consider what your max is beforehand (are you happy to let it go for $716k?)

    For future reference, you should have tried to sus out from the agent if the sellers were willing to sell before auction and at what level. Then put in an unconditional $715k offer with a time limit e.g. 5pm the same day, saying it is your best and final, that you have another property you are going to auction on on that weekend, so won't be attending the auction - take it or leave it.

    Market might be cooling but properties with those factors mentioned above will always sell well.
     
    Propertunity likes this.
  7. Jacque

    Jacque Well-Known Member Premium Member

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    Well if that's all the value you believe they add, there's little point hiring one :rolleyes: however in my experience (of bidding at auctions for clients for 13 years now) I can tell you that emotion and nerves can easily undo all good intentions of practical tactics prior to bidding.
    We've seen it all: bidders losing control and increasing in increments that were costly and unnecessary, bidding against themselves, body cues giving their position away, egos overtaking commonsense, losing count and bidding over their maximum amount (been to quite a few auctions where the bidders have retracted bids due to becoming flustered and losing control) etc etc. Auction is theatre, and not all buyers have the stamina, experience, confidence or knowledge to put themselves into the best position for what will happen on the day.

    Naturally at the end of the day, in a high-demand auction with several good buyers, he/she with the biggest chequebook triumphs but you also need to consider the alternatives if the property gets no bids, a vendor bid is made, property gets passed in.....

    Do you know who has the legal right to first negotiate with the vendor?
    How do you handle the milling selling agents who will be circling you during the process?
    What does a vendor bid mean and how many can be made here at NSW auctions?
    How do you know when the property will be declared on the market? (forget auctioneers telling you these days as they're under no obligation to do so)
    How confident and experienced are you at negotiating post-auction?

    Anyway just some food for thought and, like @Propertunity I'm biased as I'm a longtime BA but good luck and I do wish you success tomorrow. Be curious to know how it goes so keep us posted :)
     
    Ben John1 and Propertunity like this.
  8. housechopper2

    housechopper2 Well-Known Member

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    Hi @EvaK - how did you go at auction yesterday?