Published at: 6/21/2016 3:29:23 PM
You’ve seen a property you’re interested in but you’re not so keen on buying at auction. Rest assured, there is another way to make the place yours.
In a hot market vendors are often keen to sell their property at auction. But for buyers, the high pressure environment of an auction can be less attractive.
Happily, there is an alternative, and it involves making a pre-auction offer. If you play your cards right, you could come up trumps as the new owner of the property – without having to deal with the stress of an auction.
Here’s what’s involved.
Making a pre-auction offer is as simple as putting in writing what you are prepared to pay for the property. Then submit your offer to the auction a week or two before auction day. However making your offer compelling calls for three critical steps.
Step 1: Know the market
The listing agent may have provided an estimate of the likely sale price achievable at auction. Remember this is an estimate only and it could be a low ball figure. It’s up to you to work out what the property is really worth, and that means lots of research.
Use the web to check out the sale price of nearby properties that have recently sold – either at auction or private treaty. Quiz the agent on how many contracts have been issued, and ask why the property is being sold. If the vendor has already purchased elsewhere for instance, they may be more willing to consider a pre-auction offer. Importantly, ask if any other offers have been made – and if so, what sort of money is on the table.
Once you have a firm idea of what the property could sell for and the level of buyer interest, consider making a strong offer – close to your buying limit but still with some powder in the keg.
Step 2: Don’t reveal your hand
Selling agents are paid to achieve the highest possible price, and chances are you’ll be asked about the maximum price you’re willing to pay. Don’t give away too much as this can limit your bargaining power – especially if the agent has received other pre-auction offers.
Step 3: Be organised
Pre-auction offers are typically unconditional so it is critical to have all your ducks in a row. That means having the sale contract checked out by your solicitor – and talking to your lender. It would be a disaster if your offer was accepted only to find you are knocked back on finance.
ME offers conditional loan approval, and this puts you in a strong negotiating position as you know exactly what your buying budget looks like. Your ME Mobile Bank Manager can help you arrange conditional pre-approval. Don’t be afraid to let the selling agent know you have conditional loan approval in place. It shows you mean business.
If your pre-auction offer is rejected, be prepared to walk away. The property could be passed in at auction, and the agent may get in touch to see if you’re still interested. Either way, you enjoy peace of mind knowing you haven’t blown your investment budget, and another equally appealing property probably lies just around the corner.