I put in an offer today on a property that is going to auction this Saturday. The offer lapses in 3 business days because I didn't put in a shorter timeframe on the contract. If the vendor doesn't accept the offer then it lapses on Monday. If I don't get a response from the vendor prior to the auction can they go ahead with the auction on Saturday and sell the property, or go ahead with the auction but doesnt sell and decide to accept my offer?
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Offer before auction
- Thread starter twinkle_star
- Start date
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Who Replied?just redraw the offer then an put in another offer which expires on the same day.
Thanks. I'm just trying to work out whether I've made things easier for them because if the auction doesn't go as well as they hope then they still have the option of acepting our offer as a backup plan.
Thanks. I'm just trying to work out whether I've made things easier for them because if the auction doesn't go as well as they hope then they still have the option of acepting our offer as a backup plan.
Exactly.
If offering before auction then you need to put a time limit on the offer to expire BEFORE the auction. Otherwise it is just an escape plan if needed for the vendor who will (naturally) wait for the auction to see if there is a higher result.
On one of those TV shows a vendor knocked back a pre-auction contract for $560K. Property sold at auction for $540K.
Marg
Thanks. I'm just trying to work out whether I've made things easier for them because if the auction doesn't go as well as they hope then they still have the option of acepting our offer as a backup plan.
Easier for them? What's in it for you?
As Aaron wrote, because it's an auction your offer is unconditional if they accept it. So won't have the luxury of a cooling-off period or a finance clause, or it being conditional on a building inspection. You've bought it. If you cannot get finance then you're in trouble.
just redraw the offer then an put in another offer which expires on the same day.
Ok, this sounds simple enough! If our offer doesn't get accepted by noon tomorrow I'll withdraw it and see how we go at the auction.
Easier for them? What's in it for you?
As Aaron wrote, because it's an auction your offer is unconditional if they accept it. So won't have the luxury of a cooling-off period or a finance clause, or it being conditional on a building inspection. You've bought it. If you cannot get finance then you're in trouble.
I had no intention of making things easier for the vendor but unfortunately I only thought of this scenario after I'd put in the offer.
Also my thinking was that I would have attended the auction anyway and if I was successful would not have been able to put in special conditions on the contract anyway. Having no auction experience (except going to see a couple) I'd prefer to avoid buying at auction but by the time we had decided to put in an offer it was within 3 days.
Actually, we've already gone ahead and had a building and pest inspection done before putting in an offer.
The only risk that I can see of us not getting finance would be if the valuation came in low. Otherwise we have pre-approval already. Are there any other risks I need to consider?
I had no intention of making things easier for the vendor but unfortunately I only thought of this scenario after I'd put in the offer.
Also my thinking was that I would have attended the auction anyway and if I was successful would not have been able to put in special conditions on the contract anyway. Having no auction experience (except going to see a couple) I'd prefer to avoid buying at auction but by the time we had decided to put in an offer it was within 3 days.
Actually, we've already gone ahead and had a building and pest inspection done before putting in an offer.
The only risk that I can see of us not getting finance would be if the valuation came in low. Otherwise we have pre-approval already. Are there any other risks I need to consider?
umm i wouldnt be bidding under auction conditions if u need finance or have no experience with auctions. A pre approval means nothing.
It will be your 10% deposit on the line, a bank is under no obligation to give you the money.......
They can accept it until you withdraw the offer. However, because your offer, should it be accepted, would be within 3 days of an auction it will be under auction conditions and be unconditional.
Is this 3 day period before and after auction wherein offers are unconditional a Victorian rule or a national australian rule?
Are there any other risks I need to consider?
The thing with auctions is that the purchase is unconditional and you must have the 10% deposit on the spot and be able to settle with the specified period.
There are no "out" clauses for finance or building inspections: you have bought the property unconditionally. If you cannot settle for any reason you lose your 10% deposit PLUS you also pay the difference between your sale price and whatever the vendor subsequently sells the property for: so if you buy it for $500k, pull out, and the next buyer pays $400k then you are liable for the $100k shortfall.
It IS possible to have special clauses of your own put into the contract but these would have to be negotiated with the vendor some time before the auction and naturally the vendors are under no obligation to accept them.
umm i wouldnt be bidding under auction conditions if u need finance or have no experience with auctions. A pre approval means nothing.
It will be your 10% deposit on the line, a bank is under no obligation to give you the money.......
I understand where you are coming from but just because I have no experience bidding under auction conditions doesn't mean I should avoid them. Surely the best thing to do is to gain experience through attending and participating in them. Auctions are very common in Melbourne.
Yes, I will be needing finance and I understand there is a risk of not being able to obtain finance. But I have considered the risk and in my case I believe the risk to be low enough that I go ahead with the auction.
The 10% is not necessarily required on the same day of the auction. What can happen is that a holding deposit is provided on the day (say $1k) with the balance of the 10% to be provided at a specified date. Settling within the specified period is not an auction only requirement.The thing with auctions is that the purchase is unconditional and you must have the 10% deposit on the spot and be able to settle with the specified period.
True, that would be a worse case scenario. But I think you're also assuming the buyer (me) is over paying for the property.There are no "out" clauses for finance or building inspections: you have bought the property unconditionally. If you cannot settle for any reason you lose your 10% deposit PLUS you also pay the difference between your sale price and whatever the vendor subsequently sells the property for: so if you buy it for $500k, pull out, and the next buyer pays $400k then you are liable for the $100k shortfall.
No vendor would ever allow an auction contract with less than a 10% deposit in Melbourne. It just doesn't happen. Great to theorise but let's stick to reality.
I disagree, it is reality. At the auction today the question was asked how much deposit is required today and the agent said $1k with the balance of the 10% to be paid next week.
No vendor would ever allow an auction contract with less than a 10% deposit in Melbourne. It just doesn't happen. Great to theorise but let's stick to reality.
I've negotiated 5% deposit at auction a few times, maybe it's just current market.
