Prior offers for property on auction

Hi all,

I really like this property which is scheduled for auction this weekend. We wanted to put an offer on the property at 100K over the advertised price, and even the agent said it was good- but the vendors wanted to go to auction anyway.

I am against auctions, but I have advised the agent that I will attend the auction, but not as a bidder. I also reminded him of my offer.

Now, can someone tell me what happens if the bidding reaches/exceeds the reserve price, but it is still less than our offer- can the vendors not accept the highest bid and still go with our offer? How does it work?

Any help would be greatly appreciated.

Cheers,
Lee
 
Now, can someone tell me what happens if the bidding reaches/exceeds the reserve price, but it is still less than our offer- can the vendors not accept the highest bid and still go with our offer? How does it work?

The vendor can accept / reject bids at their discretion.

Is your offer presented on a signed contract?


Cheers,

The Y-man
 
Thanks Y-Man. The agent did not ask us to present offers in writing as the vendors had decided otherwise. He did tell us that only two people had actually offered a price close to our offer, while about 30 other people were way less than what we were thinking.

Auction is Saturday, and he courtesy-called me this arvo to see if we are coming to auction. He even said the vendors might sell lower than what we're prepared to offer- but I think its unlikely considering they wouldn't take prior offers in the first instance!
 
By the way, what do you think will happen now that I have told the vendor my intention? Do you think he'll advise the vendor or could he keep it to himself and get away with it. After all, his aim is just to get the house sold above reserve, right?
 
By the way, what do you think will happen now that I have told the vendor my intention? Do you think he'll advise the vendor or could he keep it to himself and get away with it. After all, his aim is just to get the house sold above reserve, right?

Put yourself in the vendor's shoes:
1. Your offer is verbal and not binding
2. a bid at an auction (even if lower than yours) is binding.

The Vendor will of course go to the binding one, so long as it is in the price range they want.

You may find that the agent will get back to you TOMORROW or FRIDAY to put your offer in writing.

This is because an offer in this timeframe will be as binding (unconditional) as a bid at auction.

From your side, I assume you have no issue with making an unconditional offer right?

Cheers,

The Y-man
 
So the agent has you at $100K above the advertised price and two other people close (and 30 interested people below).
He'd be telling the vendor that it looks like being a pretty lively auction. When agents know they have a few keen punters, they often advise the vendor to go to auction.

I am against auctions, but I have advised the agent that I will attend the auction, but not as a bidder. I also reminded him of my offer.

Agents would hear this every day of the week. It's part of the game. I've said it myself, and then shown up as a bidder.
 
Put yourself in the vendor's shoes:
1. Your offer is verbal and not binding
2. a bid at an auction (even if lower than yours) is binding.

The Vendor will of course go to the binding one, so long as it is in the price range they want.

You may find that the agent will get back to you TOMORROW or FRIDAY to put your offer in writing.

This is because an offer in this timeframe will be as binding (unconditional) as a bid at auction.

From your side, I assume you have no issue with making an unconditional offer right?

Cheers,

The Y-man


Totally understand.

Actually, the reason why we don't want to go to auction is because we want to put in a conditional offer (subject to finance and building inspection). I have my pre-approval letter from the bank and I have mentioned this to the agent. I am only concerned about the valuation that the banks complete.

I am happy to put an offer in writing, but conditional. Do you think it will help if I showed the agent my pre-approval letter? I know I'm fussy, but I need to cover myself as well.
 
So the agent has you at $100K above the advertised price and two other people close (and 30 interested people below).
He'd be telling the vendor that it looks like being a pretty lively auction. When agents know they have a few keen punters, they often advise the vendor to go to auction.



Agents would hear this every day of the week. It's part of the game. I've said it myself, and then shown up as a bidder.


Know what you mean, and your probably right. But I can't go to auction......but just trying to hope something works my way at the auction without me bidding!
 
I am happy to put an offer in writing, but conditional. Do you think it will help if I showed the agent my pre-approval letter? I know I'm fussy, but I need to cover myself as well.

If I were the vendor, I would not consider your offer unless the property is passed in.

To a vendor (in this market) a conditional offer is as good as a verbal one - i.e. not worth anything.

A pre-approval letter is unfortunately also not worth the paper it is printed on to a vendor.....

You need to be careful then of signing ANY offer in the coming week - as you may inadvertedly make an unconditional offer (I think any offer made within - before or after - 3 days of an auction is uncondtional)

Cheers,

The Y-man
 
You need to be careful then of signing ANY offer in the coming week - as you may inadvertedly make an unconditional offer (I think any offer made within - before or after - 3 days of an auction is uncondtional)

Cheers,

The Y-man

3 days before makes sense, however 3 days after, probably not, as you are able to place conditions on your offer if you negotiate after the auction due to the property being passed in??
 
If I were the vendor, I would not consider your offer unless the property is passed in.

To a vendor (in this market) a conditional offer is as good as a verbal one - i.e. not worth anything.

A pre-approval letter is unfortunately also not worth the paper it is printed on to a vendor.....

You need to be careful then of signing ANY offer in the coming week - as you may inadvertedly make an unconditional offer (I think any offer made within - before or after - 3 days of an auction is uncondtional)

Cheers,

The Y-man

Thank you Y-Man. You make a fair point. I had faint hope because from what the agent told me a week back, my offer would have been better by at least 30K as compared to what the others were willing to pay. A lot of properties still sell on private treaty with conditional offers and the vendors take a chance.

Guess its time to move on then....
 
3 days before makes sense, however 3 days after, probably not, as you are able to place conditions on your offer if you negotiate after the auction due to the property being passed in??
Y-Man is correct (at least as far as Vic is concerned). if a property passes in & you buy it after the auction it's still subject to an auction contract - i.e. unconditional.
 
3 days before makes sense, however 3 days after, probably not, as you are able to place conditions on your offer if you negotiate after the auction due to the property being passed in??

Y-Man is correct (at least as far as Vic is concerned). if a property passes in & you buy it after the auction it's still subject to an auction contract - i.e. unconditional.

Actually I need to get clarification on this - so far all I can see is that there is no COOLING OFF PERIOD, but does not say anything about conditions, other than SALE AT AUCTION:

http://www.consumer.vic.gov.au/CA25...erty~&2=10-Buyers+and+Sellers~&3=60-Auctions~

If you purchase a property that has been offered for sale by public auction either at the auction or within 3 clear business days before or after the auction, there is no cooling off period.

At what point is the property sold?
When the auctioneer has reached, what seems the final bid, he will announce, "Going once, twice, three times…SOLD!". There are no further offers accepted after this point, however this is not a legally binding contract until the buyer and seller have signed the contract of sale.

Because this is an auction, the buyer cannot make the contract subject to conditions nor is there a cooling off period.

When all checks have been made, the title and transfer documents have been exchanged and the balance of purchase price has been paid, then the property is sold.



Cheers,

The Y-man
 
Thanks all. One last Q on the process, isn't it dependent on the vendor to decide if they are willing to accept a conditional offer, probably coz they are getting 30K more for taking a chance? Also, would it make a difference if I am happy to write a cheque for the 10% deposit amount on the same day, but conditionally?

If you think I am obsessed/possessed, that's probably the case!!
 
Do you mind if I ask will you be going to the auction? And if so, why not put in whatever offer you want to before, but if you don't get it prior to auction, why not go and bid.

You might just save yourself some money.
 
Do you mind if I ask will you be going to the auction? And if so, why not put in whatever offer you want to before, but if you don't get it prior to auction, why not go and bid.

You might just save yourself some money.

I know I can probably save money by going to auction. But I'd like to put a conditional offer on the property. I have seen instances when the bank valuation comes back less than what someone has paid for a property and in that case the 'Subject to finance' clause saves the day.

That's why I am happy to pay a premium because my offer is conditional. Hope this makes sense.
 
It does make sense, but I still think you may pay more prior to auction that you could get it at auction.

My mum was worried recently when she sold a house that the purchasers' bank would not value it up enough and the contract could fall over.

I put the concern to our loan broker. He said that it doesn't happen except in cases where purchases are between family members and prices are not the same as being sold in the market. (I realise that it CAN happen, but in his experience as a broker, he said he doesn't see banks value lower than purchase price, except in exceptional circumstances.)

I do realise that if you went totally crazy at the auction and paid well over the value of the property, the bank valuation could be a concern to you, but you seem to be sensible enough that you would not do that.

If you are worried that you might get carried away and bid too high, you could get someone else to bid for you with a definite limit.
 
Thanks Wylie. Maybe its me, but I just don't want to buy at an auction. That will probably mean my dream house would walk away in front of me, but I am firm on this.

Can I ask a question? How high can the reserve price for a property that has been advertised for, say 460+, be? Are there any legal limitations?
 
Thanks all. One last Q on the process, isn't it dependent on the vendor to decide if they are willing to accept a conditional offer, probably coz they are getting 30K more for taking a chance? Also, would it make a difference if I am happy to write a cheque for the 10% deposit amount on the same day, but conditionally?

If you think I am obsessed/possessed, that's probably the case!!

The winning bidder must write a cheque on the day for 10% anyway & it's unconditional. In a climate with almost 90% of auctions selling it's not surprising that the vendor would prefer to leave it to the market. Why would they risk your deal falling over due to conditions & then have to start again with a new campaign?
I agree with wylie. It would be a very rare thing for a val to fall over on an auction contract. By definition this is what the property is worth on the open market. If you are comfortable with your ability to get finance I would be bidding.
One last thing: you mentioned an "asking price." This is rare for an auction. In the current market a house going to auction for 500+, for example, would probably sell for at least 600, quite possibly a lot more from what's been reported lately. You will know the fair value from other houses in the area but it's possible that the vendor / agent actually thinks that they will receive a higher bid than what you've offered.
 
Oops. I started writing the reply & got distracted. Just read your last post.
The short answer is that there is no highest limit. Just depends if there's 2 people who want it badly enough. I'm pretty sure that agents are actually supposed to quote a range for auctions but I notice that often doesn't happen. The only requirement is that if the range is given as 450-520, the reserve price will be somewhere in that range.
 
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