Usual negotiation process in Sydney

Hi,

What's the usual negotiation process purchasing in Sydney (outside of auctions)? In this case, it's for a property that is going to auction so a contract is available, but they are open to pre-auction offers. Is it usually:

1) The buyer discuss variation of terms to the sellers contract and the price with their solicitor, sign it and then buyer's solicitor sends it over to the sellers solicitor
2) The buyer discuss with the agent and when have a verbal agreement, the contract is drafted up
3) Something else

Thanks

 

Since it's going to auction, it will probably be on auction terms (unconditional with no cooling off, 10% or as agreed deposit on exchange). Vendor wouldn't accept anything else unless they weren't confident in the auction. And currently it seems Sydney is selling well.

 

Thanks Trainee. Agree it will most likely be on auction terms. It's the negotiation on price which I'm wondering how best to handle. It seems that going through an agent can leave the buyer with no clarity if the offer was presented to the owner.

 

I find that purchasing before auction really means two things.

In a quiet market, they want to lock something in, rather than have the embarrassment on auction day and show that they are selling a pup.

however, if the market is going well, then you should be asking what the vendor will sell for? Otherwise all you are doing is setting the floor for your auction day.

If you offer 1 mill today, you will be there on auction day offering one will.....with an opening vendor bid of 990,000

 

How is that different from something that's not going to auction?

 

Trainee is spot on. Aside from the unit / apartment market, Sydney auctions have been performing quite well and it would likely take an outstanding offer to deter an owner from seeing the auction through.

Of course every campaign is different and if they have stated they are open to offers then that’s an encouraging sign - perhaps they haven’t had the response they were hoping for? Or perhaps they’re just trying to gauge a level of interest and see who their strongest buyers are. Hard to say.

Either way, no harm in placing an offer with an expiry prior to the auction. And state what conditions you would like to change or are flexible on (e.g. I am prepared to offer $x and I can agree to a shorter / longer settlement if that suits the vendor etc.)

Sometimes conditions can be very attractive for a vendor depending on their circumstances.

Good luck

- Paul

 

Thanks Paul and I do agree with Trainee that overall Sydney auctions are holding up relatively well.

Is "placing an offer" usually through completing and signing a contract with the buyer's solicitor who will then pass it onto the seller's solicitor?

 

Some agents will be ok with a written offer via email, however it’s best to complete the signed contract with your offer, and have your (buyers) solicitor complete the 66W showing that you are ready to go unconditional.

Submitting this kind of offer will have more weight than a verbal offer on the phone to the agent. Obviously no guarantees it will be successful. Best of luck

- Paul

 

Most vendors will declare that they're "open to offers" but you need to find out if they actually will sell prior, and if so, under what price and terms conditions. Remember every sale is different, so finding out as much as possible about the vendor's situation will assist in determining your negotiating strategy here. Little point showing your hand in a pre-auction offer unless you need to, or know there's a real possibility of selling.

 

Thanks all for the tips!

 

Even if it's going to auction you can still ask your solicitor to review the contract and agree with the vendor any amendments to apply whether its sold by auction or prior. Usually at least remove silly terms like release of deposit. But you can also try including lower deposit. You can submit a pre auction offer on contract with the terns already agreed. If not accepted you can still go to auction with the slightly more favourable terms.