Offer prior to auction questions

Discussion in 'The Buying & Selling Process' started by lettert, 23rd Jan, 2020.

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  1. lettert

    lettert Well-Known Member

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    Saw potential future ppor house we love - would like to buy it given our conditions are met

    Auction is scheduled.

    1. If vendor accepts offer prior to auction will they save auctioneer etc cost? ie is there any reason to accept a price below what their "best case scenario" or hoped for one is?

    To further clarify, hubby and I have strong reasons for not being able to bid at auction, which we're sure the agent will understand. So it's either an offer prior or no offer (or maybe an offer after if the auction falls through)

    2. Sales campaign is quite short ie only 3 weeks vs 6 weeks I've seen for comparable properties. Is this indicative of anything eg vendor in a hurry to sell?

    3. We prefer a longer settlement, what is the longest settlement you've offered that the vendor accepted (or heard of accepting)? We will likely offer a slightly higher price in exchange for longer settlement.
     
  2. Trainee

    Trainee Well-Known Member

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    If you want it, make the highest offer you are comfortable with and tell them you wont attend the auction. The vendor isnt obliged to take your circumstances into account.

    what will make a vendor accept a pre auction offer? Bird in the hand, really.
     
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  3. wylie

    wylie Moderator Staff Member

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    Vendor won't save the auctioneer fee. We've done this before, and the fee is paid regardless. But it is only about $500 from memory. Not a biggie.

    Most sales campaigns are four weeks, so I'd get in early, find out what they are looking for (longer settlement, short settlement) and be prepared to make an offer that appeals to the vendor.
     
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  4. Trainee

    Trainee Well-Known Member

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    Op, will your offer be unconditional?
     
  5. lettert

    lettert Well-Known Member

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    Thanks @wylie good to know about the auctioneer fee!
     
  6. lettert

    lettert Well-Known Member

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    @Trainee finance is not an issue, but will be subject to B&p
     
  7. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    There will be no "subject to" clauses accepted during an auction campaign. You get all your inspections done before making the offer.
     
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  8. lettert

    lettert Well-Known Member

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    we're not going to be bidding at auction hence the prior offer
     
  9. wylie

    wylie Moderator Staff Member

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    Wouldn't you be better to offer a cash unconditional contract and leave out the "subject to B&P". If I was the vendor with an auction looming, I would not sign any "subject to" clauses. It could ruin the auction if you pull out under such a clause.
     
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  10. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    My answer does not change.
     
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  11. Trainee

    Trainee Well-Known Member

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    unless the vendor has no confidence in the auction, why would they accept a b&p condition?
     
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  12. lettert

    lettert Well-Known Member

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    thanks Wylie I've been thinking about this. I think we will have a chat to agent. If it seems likely the vendor would accept our bid then we can do a b&p ahead of time, it's not an issue. but I don't want to run around doing lots of b&p's on potential properties. (and I'm a pretty zen person, I won't be heartbroken if this property doesn't work out for us at the price and settlement terms we need)

    I think our offer might be close to what vendor wants. Our competition would be developers who if I'm not mistaken would also want long settlement times?
     
  13. Trainee

    Trainee Well-Known Member

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    Developers are more likely to pay more than owner occupiers since they have development profits to add to the bid.

    If the place attracts developers, preauction offers with conditions are unlikely to be accepted. Its not so much what the vendor wants as a minimum, but what the vendor thinks they can get.
     
  14. lettert

    lettert Well-Known Member

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    ah, that's interesting, did not know that

    I have purchased an auction campaign property previously with subject to clause, but that was after the auction fell through

    if it's really the case that there are no subject to clauses during the campaign then we'll just wait
     
  15. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Good luck with that :)

    No.

    There is no interest in the property and the agent has no-one coming to the auction.

    Hope for this is not a winning strategy.

    No, it could be there is so much interest in the property there is no reason to wait or possibly lose some bidders not prepared to wait 4 weeks who move on and buy something not going to auction, but just for sale.

    90 days ( 180 days ) depends on all parties' circumstances.

    Well you need to do something they want that you can bargain with - so yours in the best looking offer.
     
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  16. Wendy Chamberlain

    Wendy Chamberlain Well-Known Member

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    In answer to your questions:

    1. most of the time the auctioneer is one of the agents so don't charge a fee or they waive it if the vendor asks.

    In this market, there is not a lot of incentive for a seller to take a property out of auction unless an offer prior is eye watering. Depending on the agency, if your offer is entertained by the vendor, the agent will do the ring around to all the other buyers and if another buyer wants to compete, you'll end up in a board room auction situation anyway. That's what happened for my client prior to Christmas.

    You can always sit tight and see if the property passes in at auction, then re approach the selling agent.

    2. A standard auction campaign in Melbourne is 4 or 5 weeks (generally 3 weeks of opens and auction on 4th weekend or 4 weeks of opens and auction on the 5th weekend).
    A shorter campaign may be due to time of year. I've seen a few properties rolling off post Christmas break with shorter auction campaigns, not taking the usual 4 weeks.
    I'd suggest this is probably vendors looking to tap into pent up buyer demand rather than an indication of desperation.
    As per above, a board room auction triggered by an acceptable offer will also shorten a campaign.

    3. Settlement timeframe may or may not be negotiable, depending on the vendors circumstances. Investor vendors tend to want quicker (30-45 days), particularly if a property is vacant.

    If the home is owner occupied, they may want longer if they need to buy elsewhere (90-120 days) or be negotiable if they have somewhere they can go -provided the price is right.
    We sold a client's home in early November 2019 last year with a May 2020 settlement date, as she is happy to stay on in the meantime, but her condition was that she achieved her price (which the buyer paid, in order to get the settlement they needed to line up their ducks).

    Yes, developers like longer settlements but also like to be able to get a project moving through the settlement period if at all possible. A longer settlement may not suit a vendor who needs the cash in a shorter timeframe or if they've made a commitment or purchased elsewhere.

    Ultimately, every buyer and seller is different, as are their circumstances. Ask for what you need and if it works for all parties, then a deal can be done.
     
  17. TMNT

    TMNT Well-Known Member

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    one very important factor

    what sort of a market is it ? Hot/Warm/Cold/Dead

    that will severely determine chances of being accepted