Heated property markets often see a plethora of buyers angling to make pre-auction offers, but is this still a good move when real estate prices start to cool?
MARQ Property Licensed Agent Rachel Anasson said making an offer before an auction was an accepted practice and was particularly common when a buyer had fallen in love with a home did not want to run the risk of missing out on auction day.
Here are some tips about when it may be a good time to make a pre-auction offer and things to consider before you do.
RESEARCH
‘Knowledge is power’ so you will want to be well versed in the current market and recent sales in the area so you don’t make an offer that is too high or too low.
It’s a fine balancing act to arrive at a figure that is within your budget but still acceptable to the vendor, so sizing up the local market conditions will help you to have a better understanding of what the property might be worth.
If you have the opportunity, attending a few auctions may be a good idea. It will allow you to familiarise yourself with the auction process in case your offer isn’t successful and you still want to bid at auction.
BE READY, KNOW YOUR NUMBERS
Having pre-approval and finance arranged will help you to feel more comfortable about your borrowing capacity and how far you may be able to negotiate your initial pre-auction offer.
“Pre-auction offers are a good idea, particularly if you feel like you’ve found your dream home and you don’t want it to get away,” Rachel said.
“But this should only be done if you’re in a strong financial position, have pre-approval and finance organised, know where your capacity is at; and can make a really strong unconditional offer prior to auction.”
STRONG OFFERS
Rachel said serious buyers needed to put their best foot forward with a strong offer for the best chance of success.
“If you want the property, you should go for it,” she said. “Making an offer prior to auction can certainly help secure the property and help get it taken off the market before auction day.
“But you need to go in hard and you need to go in strong because the offer needs to be enticing enough for the sellers to accept and stop the auction from going ahead.”
Making a low offer before auction may not be a sound tactic because it could be dismissed outright with hopes of attaining a higher price at auction.
AGENT EXPERTISE
Apart from the sellers themselves, no one will have more intricate knowledge about a vendor’s expectations for the sale of the property than the selling agent, so it’s worth having a chat with them to see if you can garner further information to guide your decision-making.
It’s unlikely the agent will provide information on a potential price, but you may be able to find some useful information about the marketing campaign to help you decide on an offer that both meets your budget and the seller’s hopes.
The agent may also let you know about potential competition, including how many people have expressed genuine interest in the home, and if the vendor may be open to a pre-auction offer.