Accepting offers prior to auction

[Lilli]

Hi,

Our PPOR is on the market - actually the auction is this weekend. Our agent is putting on some pressure for us to sell prior to auction. As we own a corner block most of the interest has come from developers who are usually reluctant to show their cards. The agent is stating she cannot be certain how many interested parties will be bidding this weekend and we should be seriously considering offers. We have had an offer in writing at a figure which we initially decided would be our bottom figure. The agent has suggested that once we accept an offer she will then approach all other interested parties and try and get them to put in higher offers (without disclosing the origional offer as this is an illegal practice).

What should we do as we are unsure as to the true value of our property!

Thanks

 

[boomtown]

1. You need to immediately fix the problem that you dont know what your place is worth by checking with RP Data.

2. If the offer you have received is low but still fair - have your agent do a quick scoot around other interested parties and if no one bites - have a go at raising the price of by the counterparty and if that doesnt work - accept their current offer even if this means selling before auction. You are less likely to get a high price in this market auction or otherwise.

 

[Lilli]

Thanks Boomtown, when I said I do not know what it is worth I obviously do however as it is an older renovated house, but on a large corner block it creates a wider price range. I obviously want to top end of the range however the offer is reasonable.

 

[boods99]

Hi,

The agent has suggested that once we accept an offer she will then approach all other interested parties and try and get them to put in higher offers (without disclosing the origional offer as this is an illegal practice).

Once you accept an offer, unless there are attached conditions, then you are legally bound to that price, so you can't go out and try to get a higher offer.
You can't accept an offer with the condition that "if someone offers more before settlement, then they can buy it"

Boods

 

[willair]

Hi,

Our PPOR is on the market - actually the auction is this weekend. Our agent is putting on some pressure for us to sell prior to auction. As we own a corner block most of the interest has come from developers who are usually reluctant to show their cards. The agent is stating she cannot be certain how many interested parties will be bidding this weekend and we should be seriously considering offers. We have had an offer in writing at a figure which we initially decided would be our bottom figure. The agent has suggested that once we accept an offer she will then approach all other interested parties and try and get them to put in higher offers (without disclosing the origional offer as this is an illegal practice).

What should we do as we are unsure as to the true value of our property!

Thanks

imho,is there another property with similar land area like yours in your local area that has sold recently, and is the price comparable to the offer you have on your table, and no one can be certain who will turn up on the auction day,some investors do their homework,say nothing and just turn up on the day with an idea of what your property is worth,and when you look at the high costs to keep a small-medium size RE agency running and stay in business because they have to sell property sometimes the agent justs want a sale no matter what you think..
I would not sign this contract,because the agent is playing you once contract is signed by you,that's the price there is no in betweens a contract is a contract,pay someone to value the property over the next few days it may cost you 400 bucks or so but in the end it could save you you from selling a property undervalued,then you have to live with the mistake..IMHO..willair..

 

[The Y-man]

We recently sold prior to auction.

On the Wednesday our agent approached us (so that the offer was within the mandated time frame that any offer would be unconditonal) with an offer from an interested party.

The next 2 days, he called everyone that had requested a s32 (the only likely bidders) and asked for "best offers".

We got one other offer ($2k higher than the original), so the agent went back to the first lot and asked them to put their best foot forward. They countered with an offer $10k higher than the original. Sold!

Cheers,

The Y-man

 

[willfong]

Hi,
once we accept an offer she will then approach all other interested parties and try and get them to put in higher offers (without disclosing the origional offer as this is an illegal practice).

Shouldn't she be doing that already as soon as she received that written offer? Like others above said, once you sign it, it's binding and you can't just decide to cancel that in favour of higher offers.

 

[Jason Rose]

I don't know how the market is travelling in your area, but the market is certainly on the softer side in Brisbane.

They main reason the auction method of sale is being used in the Brisbane market is not so much to acheive a premium price but to reduce the time on market and get the property sold.

There needs to be a number of other things taken into consideration
1) what happens if you do not sell prior to or at auction? ie have you already bought another property and have bridging(equity financing in place)
2) are you hoping to sell or do you need to sell
3) if the property is suitable for development and it is not sold on a unconditional basis before or at auction will the developers be making offers after auction subject to due diligence(council approval etc)?
4) has most of the interest come from developers or owner occupiers. if it has come from developers there will be no emotional tie to the property. they will do there sums and be prepared to pay $XYZ. if the price is above that level then they continue looking. After all they are in the business to make a profit and with interest rates the way they are plus holding & development costs there will need to be a decent margin in it for them. if your main interest has come from owner occupiers they are probably looking at the upside of having a good family sized block with heaps of space for the kids etc to run around(not that kids spend much time outside these days

at the end of the day it is your call which way you go. afterall nobody else knows your personal circumstances or financial postition. for me in this market i would prefer to know what i have on an unconditional basis is it is at a level that is acceptable.

p.s. I have been a licensed auctioneer for 21 years. I have lost count of the number of times(in a market like this) when an owner has knocked back a reasonable offer only to find out they have sold weeks or months later at levels lower than what they have been offer prior to or at auction. unfortunatley there are no wood duck buyers out there at the moment.

Good luck

 

[Lilli]

Thank you everyone for your feedback.

We do not have to sell as we have not purchased elsewhere. We are planning on renting and buying more IPs with the funds so we are not in any rush to sell.

The agent rang last night stating that the offer had increased another $10k however it is still just below our bottom figure - I said to her that I would expect to be negotiating for bottom figures if a property was passed in, not prior to auction. I thought people took offers prior to auction when they were outstanding amounts. She was not impressed by what I had to say and told me that it all depends on the circumstances.

I spoke to another agent from another company in the area who I know through a friend and she told me not to accept anything atleast another $20k over what they have just offered prior to auction.

We still are unsure what to do! No doubt the agent will be on the phone later today!

 

[evand]

Thats because you are jeapardising her commission with silly statements like that. Like trying to get the best price for your property

When you receive an offer, say to the person "i'll get back to you tomorrow" (or 48 hours or whatever)

Then ring around and see if you get the others to up their offers or to even make an offer.

Don't ring around after you have accepted an offer. Thats not good form.

She was not impressed by what I had to say and told me that it all depends on the circumstances.

 

[Lilli]

I thought MY agent was meant to be on MY side!!!

 

[Rob Williams]

I thought MY agent was meant to be on MY side!!!

You would think so, wouldn't you.
In reality, they are on THEIR own side.

 

[pennyk]

I would accept the offer before auction. Often in RE, the first offer you get is the best offer. If it goes to auction and no-one else bids, you can be certain that this buyer will lower their offer, not increase it.
If its a fair offer, I wouldn't take the chance of losing it...... a bird in the hand is worth 2 in the bush!!
Pen

 

[Jon Chown]

Lilli, Are these the exact words that the Agent used

The agent has suggested that once we accept an offer she will then approach all other interested parties and try and get them to put in higher offers (without disclosing the origional offer as this is an illegal practice).

or was it more like. If you do decide to accept an offer prior to Auction, we must give all other parties who have shown interest in the property the opportunity to make an offer as well.

Apart from that it would have to be an exceptional offer to stop an Auction in my opinion. The best way to handle this would be to advise your agent to thank the person making the offer and advise that while the offer is attractive and you may accept it on Auction day you arenot prepared to stop the Auction for this amount without seeing if there is any other interest.

 

[Jon Chown]

I thought MY agent was meant to be on MY side!!!

While understanding that not everyone is perfect - Seller, Agent or Buyer, most Agents do have the best interest of their Clients at heart. That does not mean that the Seller or Buyer is always right and the Agent would not be doing their job if they were not keeping you informed with accurate up to date market sentiment. Remember the Buyers will dictate the sale value of the property not the Seller. The Seller only has the right to accept or decline (Sell or Hold)

 

[nortywon]

You are getting a lot of good advice and I think Jason Rose and Jon Chown are on the money...no one can make that call except you.
Opportunity (the early offer) versus risk (desire to get a higher price) are the keys when looking at offers prior to auction.
Think carefully about whether you are happy to sell at the offer level, can the agent get more out of this buyer (work the agent hard - some are lazy/scared of losing buyer, what happens if you reject this offer, etc....a very hard choice but better have the choice than no interest!!
PS Jon Chown - good comment - MOST agents do have their clients best interests at heart, unfortunately everyone seems to think we are all lying money grabbing XXXXXXxs - doesn't every basket have a few bad eggs???

 

[Lilli]

Thank you everyone for your words of wisdom. We told the agent that we would accept the offer made to us prior to auction as long as no higher offers were made on the 'ring around'. Great news was that someone put in an offer $11,500 higher than the offer we were originally happy with so great result!!

 

[Rob Williams]

Nice one. You got a result you were happy with and someone else did the same. Win-Win. Doesn't get any better than that.
Now you can start shopping for those IP's ...

 

[Jason Rose]

congratulations. sounds like it all worked out in the end.