Would you consider pre-auction offers?

Thanks, I am aware of technology, just not able to bid at auction period.

 

For mine, the fee for auction is $500. I don't think the agent gets any of that.
But I think over and above any fee, a good auction brings good free publicity for the agent, which is a good motivation to hold an auction, more than any fee from the seller....

 

The fee goes to the auctioneer, which is the agent or someone from the agency in many cases. But $2,000 or $3,000 is a more common fee for an auction, which is good publicity only if people turn up, several bidders and sales at or above reserve. Far from being the case, specially in states where auction is not the norm (qld for ex), so many times not the right way to sell. But understand it can work well as well (Sydney and Melbourne in 2014 and 2015 for ex)

 

Yes.

 

For mine, the auctioneer is not from the agency, but I know others that are (for other agencies).
How much is everybody else paying for auctioneers (and please mention the city)?
2 or 3k sounds steep.

 

Canberra is crazy with auctions at the moment. I decided against an auction, believing they are for unique properties and those which are hard to gauge the price. I was advised by my agent that they don't charge more for auctions so maybe that's why. Maybe everyone is still reeling off the success of the Block, thinking their unrenovated 3 bed one bath in the outskirts of Canberra is going to miraculously going to sell for a million dollars at auction!

 

@Gockie

My auction fee was $660 - the auctioneer was independent and he gets that fee. My total fees were only marketing which was hefty at $4,500 (websites x 4, big light up board, photos, floorplans and brochures) plus the auctioneers fee. Sydney. LNS

 

Another interesting thing my RE told me was that any pre-auction offers must then be reflected in the ongoing price / range quoted to prospective purchasers and in all its advertising.

Pre auction offers would knockout and discourage buyers under the price of your offer. This offer then has to be put on all its advertising - REs have to tell other prospective buyers the new range under the new underquoting laws (ie at future opens) in NSW. As a result you see that something with a range will go up as it gets closer to auction day. Sometimes RE will get around this by saying "Contact Agent".

Agents discourage preoffers because they need people at an auction to put pressure on buyers to outbid each other. Pre-auction offers dissipate that pressure.

What I'm wondering is, "if you do put in an offer on a signed contract pre-auction, then my legal understanding is that all offers on a contract - MUST be submitted to the vendors despite what the RE says? Can anyone confirm that?

 

Hi @Cia you certainly are correct here, in that the selling agent has a legal obligation to present all offers to vendors under the Rules of Conduct and the PSBAA (2002), unless they have written instructions to the contrary:

Passing on of purchase offers to the seller
An agent acting for a seller is required to inform their client in writing of all offers of purchase made up until exchange of contracts has taken place. The exception to this requirement is where the client has given alternative written instructions – for example, the seller may instruct the agent not to forward offers under a specified amount.
Link: Duty of disclosure - NSW Fair Trading

You are also correct about the price updating of a price range during an auction campaign- agencies like McGrath have been in trouble in the past for not doing this, so they are very careful (as are other agencies) to update and change guides accordingly (in most cases). This is fair and equitable practice.

As for selling pre-auction, I believe every offer should be considered if it is healthy enough and the price is right. The old saying "A bird in the hand" can make a difference in some cases, and especially if offered earlier in the campaign. Over the past 20+ years we've bought before, at and after auction personally and for clients and each sale, property, agent, vendor and "market environment" is different. There is certainly no "one size fits all" when it comes to negotiating here. It's really about understanding each circumstance and situation of the seller to gauge if a pre-offer is worthwhile or indeed necessary (or not).

I would recommend, however, if someone is keen to pre-offer and feel that the vendor's agent isn't being cooperative or entirely honest, to email both the agent and the solicitor at the same time, to ensure transparency. Letterbox dropping the vendor can also be tactical, though needs to be handled discreetly and cleverly (we have done this a no. of times over the years for clients though circumstances dictated slightly different letters for each one depending on the response and information we'd been provided from the vendor's agent) A timeframe with limit is always useful, after which time you can withdraw your offer. Put the work into a pre-offer with a great email and you never know how successful you might be.

 

Thanks @Jacque for that clarification. That's really useful for my next PPOR search.