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Would you consider pre-auction offers?

Discussion in 'The Buying & Selling Process' started by dmb1978, 15th May, 2016.

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  1. dmb1978

    dmb1978 Well-Known Member

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    Hello,

    As an owner with a house going to auction, would you instruct your real estate agent to not receive any pre-auction offers?

    I have been monitoring a house going to auction and cannot bid at the auction so was considering making an offer before or after if it passes in. I have been chatting to the real estate agent over the email and asked if the owner's were open to considering a pre-auction offer. Almost immediately the reply was "No. Will be sold at auction." No niceties or anything and with no idea of my potential offer.

    Surely the owners would want to hear if someone was willing to make an offer and still reserve their right to accept or not and go to auction.

    If this was my real estate agent I would be pretty annoyed.

    Just wondering your thoughts.
     
  2. wylie

    wylie Moderator Staff Member

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    As a vendor, I'd want to hear what the offer is. We accepted an offer prior to auction this time last year. It was a good offer and we had no obvious contenders for the auction. But had it not been a good offer, we would have passed it in and then gone to the market.
     
  3. dmb1978

    dmb1978 Well-Known Member

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    Thanks Wylie, that's what I thought. The agent gave a price guide originally and our offer could have been more than that but they'll never know. My other half suggested dropping a letter in the vendors letter box!!
     
  4. LifesGood

    LifesGood Home Building & Development Consultant Business Member

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    An agent operates based on their vendors instructions (or at least they should be!)

    Typically, an auction should be strictly no offers prior in order to create the most competition around the property on auction day.

    It dilutes the process by opening up to offers prior, but each scenario and each market is different so in this case who knows what the best option is.
     
  5. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    With auction clearance rates over 75% this weekend, if I was selling by auction, I would not be entertaining pre-auction offers.

    In almost every case (with only 2 exceptions in the last 12 months that I can recall) where we as buyers agents attempt to buy pre-auction, and cannot, the property always sells for more on auction day.
     
  6. wylie

    wylie Moderator Staff Member

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    I think it also depends on the city. Brisbane isn't the same as Sydney or Melbourne when it comes to auctions.
     
  7. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Going from the seller's perspective, if you have a great agent, they should be able to advise whether they think you should accept the pre auction offer or not. They mightnt get it right 100% of the time, but i'd trust my agent to be on the pulse and do the right thing and say what s/he thinks you should do in terms of accepting a pre auction offer or not. And if the pre auction offers are refused and the buyer really wants it, they should find a way to make bids on the property, even if it is via phone. The buyer maybe able to get it less than a pre auction offer... that's good luck to them.
     
  8. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    I'd consider - but I'd expect to go unconditional straight away.

    Cheers

    Jamie
     
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  9. wylie

    wylie Moderator Staff Member

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    Absolutely agree Jamie. An offer pre-auction would need to be a good offer AND clean. Otherwise the whole auction could be ruined and momentum lost.
     
  10. dmb1978

    dmb1978 Well-Known Member

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    Thanks all for your responses. I agree there is a process but you think they would at least ask you what your offer is. How is the agent working in the vendor's best interest if they won't even entertain a potential buyers offer? And if not for this sale and indication of buyers potential could lead to a future client relationship, but obviously not interested in this case!
     
  11. Agent99

    Agent99 Well-Known Member

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    Purchased a splitter day prior to auction giving the owners their asking price without the stress of them going to auction. Win win all round although agent did cop quite a bit of flack as people turned up to see a sold sticker. If the offer is the price you are after and advice is that it may or may not go over then accept on auction terms.
     
  12. drg86

    drg86 Well-Known Member

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    As a vendor I would want to hear pre auction offers. Just witnessed a week ago a property get passed in due to losing a big chunk of potential buyers by not accepting pre auction offers. I know there was offers at 450k and the auction passed in at 430k. The buyers that had made the offers bought other properties and were nowhere to be seen on auction day...
     
  13. wylie

    wylie Moderator Staff Member

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    My mum used to say that very often pre-auction offers were the best, and very often the bids at auction would not reach the same level. Obviously that is offers that are a good offers and not lowball "take a chance they are desperate" offers.

    I saw it many times (knowing what the offers had been after the auction). If you've a good idea of what a house will sell for and get an offer that is good enough, why not sell early?

    In our recent sale, had we had a lot more interest and were confident we would have two or more serious buyers who would bid, we may have held off for the auction.
     
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  14. Esh

    Esh Well-Known Member

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    I do think that most vendors would want to know the offers as it gives them a clear indication of what to come in auction day but each to their own I suppose. If you wanted a chance to have your affer accepted you will need to offer with a 66w
     
  15. Yann

    Yann Active Member

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    I have bought pre-auction before and timing is important as well. Most agents will not take any offers the last week of the campaign, but would consider anything earlier, whether unconditional or not. It's all about the effort vs commission for the agent as selling before means they can pocket their commission straight away versus getting the auction fee. The agent works for themselves and then for the vendor, so an agent happy with what he will pocket will push the vendor hard.
     
  16. wylie

    wylie Moderator Staff Member

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    Our offer was about 10 days before auction so it was "clean" but we did not ask for the cooling off to be waived because we had time to allow them to use those five days to confirm they could get finance (was pre-approved I believe - just needed to lock it in). Pushing for the cooling off to be waived may have meant they could not take the chance.

    We kept it quiet and continued the marketing. I doubt we would have had a successful auction so it was a good result for us.
     
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  17. Dean Collins

    Dean Collins Well-Known Member

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    So arrange to bid via phone or Skype video call.

    You don't HAVE to be at an auction to participate you know.
     
  18. Marg4000

    Marg4000 Well-Known Member

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    Our son sold at auction a year or two ago in Melbourne. Knocked back an offer early in the campaign as the agent was confident they would get higher offers.

    They didn't. Son actually said they were a bit sorry they did not accept the offer. They had already bought again, so a sale was necessary. A decent offer in the last week would have been accepted.

    Much angst, but went to auction and achieved $50K over the only offer (which was close to the reserve).
    Marg
     
  19. Chrispy

    Chrispy Well-Known Member Premium Member

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    I know of a house late last year when there was a pre-auction offer 2 weeks prior to Auction, the Owners refused the offer. It went to auction and no one turned up. The Agent then offered it to the people who made the original offer at the price they had offered and they bought it. They had been unable to attend the auction as they were away.
     
  20. Yann

    Yann Active Member

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    When I make a pre-auction offer, it is a best and final offer valid for 24h and I make it clear I will not come to the auction so it is a take it or leave it. And I will not go to the auction. So hard situation to be in when you are the vendor, but assess any pre-auction offer with your sale objective, not solely on the advise of the agent. Many agents want to charge the auction fee, and many buyers hate auctions, so think twice!