Place an offer or not...

Hi all,

I'll try and keep the story short!

I have found a property I like. It's central Sydney and is new to the market - auction is at the end of the month. There is a guide price which is within my budget - but from my experience of watching the property market closely for the past 6 months, property doesn't go for the guide price... or anywhere near! Looking at previous sales in the area, and core logic's valuation, the guide price is probably around $50K below the value. I have budgeted to spend $100K over.

I am a first home buyer and i don't want to go to auction - the process scares me. I am a contractor and although have a pre-approval from the bank and a good deposit, I just worry that full approval could go tits up!

Should i offer prior to auction, or am i just wasting my time? I have tried to gauge interest from the agent if they will entertain offers prior and they have said "I don't know".

Someone else also said to me the agent could then just use my offer to re-set the guide price while not accepting it.

What should I do? Make an offer? Forget about it?

 

If the auction is at the end of the month, you have plenty of time to submit an offer prior to the auction. Request a copy of the draft contract. You may wish to have your legal representative take a look over it. If happy with the contract, insert the price and 10% deposit that you wish to pay (make sure you put your best foot forward - don't lowball), sign the contract on the line reserved for purchaser, and present to the agent with either a cheque for the 0.25% deposit or a copy of a receipt for payment of the 0.25% deposit into the agents sales trust account. Advise the agent that you are prepared to initiate an exchange with a five day cooling off period immediately. Perhaps you could tell them that your offer is off the table at 5.00pm on the following business day. If they say No, you have lost nothing as you get the 0.25% deposit back if the Vendor does not accept your offer. If they agree to your offer, happy days as you then have 5 business days to secure your formal finance approval and negotiate any terms of the contract or price if your inspections are unsatisfactory.

 

the only reason why an owner would accept is if you offer more than they expect to get at auction, or they are not confident about the auction.

 

And the more interest and offers fielded prior to auction, the more likely they would be prepared to go to auction.

 

Keep your powder dry, go to every open house and watch how many attend and how they interact with the agent, ask for a copy of the Contract, arrange for a pest inspection [only if you are sure the house is within your financial reach] as this is a signal to the agent you are seriously interested.
Do you own research on what you think the property is worth and make sure your finance is approved and just keep quiet until the bidding is slowing and if it is within your budget, go for it.
If you miss out, there are other houses ...

 

In a strong Sydney market, and as a vendor who is currently selling (you're probably not buying my property!), I would want a 66W instead of allowing the 5 day cooling off. Although if it was early in the campaign and the offer was exceptional it may be worth consideration.

However the higher your offer, the higher the risk that the valuation doesn't stack up. So talk to your broker, understand whether you'd be comfortable buying with a 66w or at auction if you have to, and then put your offer forward after doing your due diligence. Good luck

 

Thanks so much everyone, i really appreciate your feedback.

One of my hesitations is the current market and the uncertainty. It was a discussion point at lots of viewings this weekend... whether or not to hold out and see what is happening to the economy.

I think i'm going to hold tight for now and not jump in too early. The end of the month is still a long way off...

 

There's other factors involved too - some vendors are keen to sell as quickly as possible for personal reasons. Other vendors find the auction process stressful, and are happy to get a quick and easy sale.