Offer prior to Auction

Discussion in 'The Buying & Selling Process' started by Jay Coffer, 30th Jan, 2022.

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  1. Jay Coffer

    Jay Coffer Member

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    Hi PC,

    Context: First home buyers, QLD.
    We attended a house inspection yesterday that is scheduled for auction next Saturday, giving us six days until the auction. The house meets all of our criteria and is very unique. We have been advised previously that we shouldn't bid at auction due to the inherent risks involved with finance and the unconditional nature of auctions, being first home buyers. If the value of the house comes in less than we bid we are then left in the proverbial lurch.

    We were chatting with the REA and he stated we could put in an offer with a finance clause prior to auction. I wasn't aware that this is possible, as a lot of podcasts I've listened to have stated that offers pre-auction are treated as unconditional.
    Any advise on this/against this? Our LVR is around 98% after all costs are considered, and our lender is able to approve within 4 days of the application.
    Thanks,
    Jay
     
  2. wylie

    wylie Moderator Staff Member

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    As a vendor, there's no way I'd sign a contract with a finance clause just five business days out from an auction.

    If your agent says to do so, I guess there's no harm in doing so, but it also lets the agent and the vendor know what you think the house is worth.

    Perhaps better to attend the auction, but these days that is tricky too with houses selling so far over the estimate. You'd just have to set your limit and stick to it.
     
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  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Certainly at that LVR Id be looking to avoid auctions, since only a slightly lower val may leave you high and dry.

    Only a couple of lender options for other vals at that LVR

    ta
    rolf
     
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  4. boganfromlogan

    boganfromlogan Well-Known Member

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    Offer prior looks like your only option.

    But highly unlikely to succeed.

    I have always wondered why ppl go to auction so readily when it excludes buyers like yourselves. Especially in Bris and Adelaide. Although I do understand that Melb and Syd have auctions all the time.
     
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  5. Trainee

    Trainee Well-Known Member

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    With that lvr, even if the subject to finance clause was accepted, what would the deposit be? If low, from the vendor’s pov that would be a pretty weak offer. How much deposit do you have if you plan on buying at auction?
     
  6. Marg4000

    Marg4000 Well-Known Member

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    We attended an auction where the property was passed in. Before passing the property in, the auctioneer announced there were several contracts in hand with conditions attached that would then be considered.
     
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  7. Jay Coffer

    Jay Coffer Member

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    Queensland
    Hi again trainee. Our purchase price is looking to be about 700k-750k and we've saved around 70k total. LMI around ~30k stamp duty around ~20k leaving us with around 15-20k give-or-take deposit.
     
  8. Trainee

    Trainee Well-Known Member

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    So will a vendor accept a 2-3% deposit?