Decease estate must sell at auction?? Is this correct?

defecta

defecta

Hi guys,

I was just inspecting a grossly under quoted apartment in Melbourne and the marketing literature says "auction (unless sold prior)" but when asking the agent about prior offers he said he's not taking any and it's definitely going to auction.

He went on to say they have to go to auction because it's a deceased estate and they need to show they are getting a fair market value for the house.

I'm calling BS but I don't know any better. Which is why I am here. :)

I thought he can't refuse to present any offers to the vendor or is that bad info?

Thanks in advance.

Curtis
 
Yes, he has to pass on any offers to the vendor. But usually this would be a written offer, not a verbal one as verbal offers can't be proven.

And yes, in the vast majority of cases any forced sale such as a deceased estate, mortgagee in possession, bankruptcy etc will go to auction to prove that they are getting the 'market price'. Otherwise, the trustee/mortgagee can be sued for selling below market value. A public auction removes this potential lawsuit.
 
Itr is probably a State Trustee that is selling the property and yes an Auction generally covers their backside in respect to being seen to sell at the right price.

However it is not always the best method of sale ans can result in a lower price than a normal private sale campaign.

I do a fair few Valuations for Mortgagee in Posession properties for lenders in the West of Melbourne - used for setting the reserve. Where the property is in first home buyer territiory (the majority of what I have been doing lately) I insert the following in my comments - to cover my backside.

We are aware that the property is currently mortgagee in possession and there is a high likelihood of the property going to sale by Auction. It should be noted however that in the current market in this area Auction sales may not be the best sale method. Buyers are currently using Auctions to soften up the vendor and increase their barganing position. In addition if the property is located in an area that has only limited success with auctions, with the majority of the purchasers being first home buyers most of whom are precluded from bidding at auction due to not having unconditional finance. The remainder of the potential purchasers are generally investors who are currently thin on the ground or who are seeking a real bargain.

At the moment I just wish I had some spare cash. There are going to be some crackers of bargains out there in the sub $300k price range as my Mortgagee in Posession work has increased noticably lately.


cheers

RightValue
 
It used to be that State Trustees had to go to auction but not sure if that still applies.

In other deceased estates it depends on the Executor.

In my husband's case I was the Executor and owned half of the house that was auctioned, so it did not have to be sold.

Chris
 
Hi RV,

I am not a typo zealot but I noticed one in your post and just in case that is a cut and paste from your official correspondence there should be another "i" in bargaining.

Please disregard this post if it is not a cut and paste.

RightValue said:
Itr is probably a State Trustee that is selling the property and yes an Auction generally covers their backside in respect to being seen to sell at the right price.

However it is not always the best method of sale ans can result in a lower price than a normal private sale campaign.

I do a fair few Valuations for Mortgagee in Posession properties for lenders in the West of Melbourne - used for setting the reserve. Where the property is in first home buyer territiory (the majority of what I have been doing lately) I insert the following in my comments - to cover my backside.

We are aware that the property is currently mortgagee in possession and there is a high likelihood of the property going to sale by Auction. It should be noted however that in the current market in this area Auction sales may not be the best sale method. Buyers are currently using Auctions to soften up the vendor and increase their barganing position. In addition if the property is located in an area that has only limited success with auctions, with the majority of the purchasers being first home buyers most of whom are precluded from bidding at auction due to not having unconditional finance. The remainder of the potential purchasers are generally investors who are currently thin on the ground or who are seeking a real bargain.

At the moment I just wish I had some spare cash. There are going to be some crackers of bargains out there in the sub $300k price range as my Mortgagee in Posession work has increased noticably lately.


cheers

RightValue
Click to expand...
 
I'm the executor for my mothers estate in NSW. We went to auction, more to try to have a faster process, but also partly for transparency. But they didnt sell, so now we are selling as private treaty.
 
My grandparent's house just settled via completely conventional means.

The agent had it SO overpriced initially though. A quick flick through the listings in the town showed it was near double what it should have been at.
 
Thanks a lot for your input guys.

This place I am talking about is a 2bed 1bath apt being quoted at $230k-250k but just last month a 1 bed 1 bath in the same building on the same floor but with a different northerly aspect (and less busy road) sold for $260k via private treaty. The agent started to get quite evasive after I started questioning the quoted price and it's real value and understandably refused to speculate further on what the property would sell for.

But my point is, I was considering making a written offer for the apartment, a long way over the quoted price range in attempt to bag it prior to auction.

Based on what you guys are saying, if the agent does present the offer and the vendor accepts it, only the vendor later feels its worth more than I paid, where does that leave me? Could I lose the property? Or it just the agent that is liable?

Cheers,
Curtis
 
defecta said:
Based on what you guys are saying, if the agent does present the offer and the vendor accepts it, only the vendor later feels its worth more than I paid, where does that leave me? Could I lose the property? Or it just the agent that is liable?
Click to expand...

Sorry, what are you asking?
 
No...if they sell below market value and it's an enforceable contract, that's bad luck for them. Same thing applies for you if you overpaid - although at least as a purchaser you have the cooling off period of 3 days to change your mind.
 
Cool, thanks for clarifying.

So what advice can anyone give to making sure an offer is presented to the vendor by a reluctant agent once it's made? Apart from drastically overpaying? :p

The reason I ask is because I hear stories of agents not presenting offers they don't like or contrary to the chosen selling method.
 
The agent has to forward every offer to the vendor. But most don't submit verbal offers because verbal offers aren't worth a piece of toilet paper.

If you want the agent to submit the offer, you have to put it in writing, listing 3 things.
1) Price
2) Settlement time (30, 60 days etc)
3) Any other conditions (Or if you are confident with finance etc, unconditional offers are always best)

This can either be by email, or most agents recommend that a purchaser sign the contract of sale with their offer price filled in - as it works best on compelling a vendor to sell.
 
Aaron_C said:
The agent has to forward every offer to the vendor. But most don't submit verbal offers because verbal offers aren't worth a piece of toilet paper.
Click to expand...
And here's the kicker if you think the agent has underquoted an auction campaign: Give a written offer with 10% deposit & settlement terms to suit the vendor. If it's rejected it means it can only be rejected on price. At this juncture the REA is legally required to adjust the asking price. So if you offer $250k and it's rejected the quoted range must then be changed to more than $250k. The agents know that you can stuff up their auction campaign doing this, so will discourage written offers unless they know it is a price that the vendor will accept [This is in Vic, BTW. I have no idea if the same is true elsewhere].
 
Ms Jade said:
And here's the kicker if you think the agent has underquoted an auction campaign: Give a written offer with 10% deposit & settlement terms to suit the vendor. If it's rejected it means it can only be rejected on price. At this juncture the REA is legally required to adjust the asking price. So if you offer $250k and it's rejected the quoted range must then be changed to more than $250k. The agents know that you can stuff up their auction campaign doing this, so will discourage written offers unless they know it is a price that the vendor will accept [This is in Vic, BTW. I have no idea if the same is true elsewhere].
Click to expand...

very interesting indeed.
 
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