Urgent - Beating an "accepted" prior to auction offer

Hey guys,

So I haven't exactly got much experience buying in as hot a market as Sydney at the moment, but I finally got confirmation of my pre-approval today and am starting my third week of my PPOR hunt.

I inspected a property this morning, which was the first to tick all the boxes (eg low strata, not too many units in complex, spacious enough, acceptable rental yield if I ever turn it into an investment property down the track etc).
Therefore, I was planning on bid at the auction.

Backstory is that this property was only advertised a few days ago, had its first viewing at 10am this morning, and was scheduled for auction on 18 April, but had A LOT of immediate interest.

After the viewing, I requested a copy of the contract, but hadn't sent it to my solicitor yet - then I saw the following email from the agent that was sent this afternoon (see below)...

What do you guys think? Is it too late to make an offer, given that I haven't arranged any inspections or had my solicitor inspect the contract yet (they have a link to a pre-completed strata report available for purchase, but no B&P inspection)?

> If not, do you think I can determine what my offer would need to be to secure the place (given the agent specified only offers above $800k would be required, whilst the property was advertised as price guide above $700k)?

Any input would be appreciated!

- Cheers,

Good Afternoon,

Hello and thank you for expressing interest in this property.

We have had a recent development with an offer submitted at an acceptable level for the owner and their instructions are to sell the property. Prior to exchange of contracts taking place tomorrow at 12.00pm, Friday 27th March 2015, the owner has instructed us to provide you with an opportunity to make an unconditional offer with a view of securing the property.

If you would like to participate, the owner has requested you to do the following;

Deliver to our office, to my attention at <AGENT ADDRESS> prior to 12.00pm Friday, 27th March, 2015 the following;

- A signed contract with your best and final offer. We will not be providing you another opportunity to improve your offer to be fair to all parties.

- Deposit cheque made payable to <AGENT> (personal or bank cheque are ok).

- Signed 66w certificate signed by your solicitor or conveyancer (this waives any cooling off period).

- If you or your solicitor wishes to make changes or additions to the contract, please do so and initial these changes. These will be considered as part of your offer.

Please only present your offer if it is above $800,000 as lower offers will not be considered.

The owner has instructed us to exchange contracts at 12.00pm, tomorrow Friday 27th March 2015 with the best offer and have advised that no offers will be considered after this time or if not provided in the above format.

Thank you and we wish you all the best in securing this lovely property.

Kind Regards

it is an effect of hot market.

you can make an offer of what you think is right price for property or keep looking... 3 weeks isnt long time.

they want 66W signed, so if valuation falls short or have issues with finance or have issues with buildings, you wont be able to rescind contract.

i don't think agent is bluffing, this is becoming norm in Sydney and Melb market now.

best to buy at open auction if you heart is not set on this one!
Wow! I've never seen anything like that.

I'd do what I would always do, work out what I think it is worth, then consider how much extra I'd pay just to play the game.

I was in a multiple offer situation this week in Brisbane and I thought that was bad! I had a good price in mind, added an odd number of thousands to try game it, and made sure the agent knew damn well that finance wasn't going to be an issue. (Oh, and success).
Thanks for the input guys!

I guess the difficulty is trying to ascertain exactly "what I think it is worth".

The most recent comparable I can identify sold for $832,500 at auction a couple of weeks ago and I thought the guy overpaid by a decent margin at the time (maybe not, from the looks of it).

In the comparables favour:

* The comparable had a garage instead of a secure car space and;
* The comparable was in a better location

On the other hand, in this property's favour:

* This property is about 14% bigger in total sqm than the other property
* This property presents better / is more recently renovated
* This property has a bit lower strata and a pool.

So maybe they are worth the same? I find it so difficult to ascertain what a property is truly worth...

The original price guide on this property was "above $700k", so the agents have clearly underquoted to generate extra interest and get people emotionally invested.

The question is how much they have underquoted by and what offer I'd need to make to beat the existing one - $822,500? $832,500?

Thinking about calling the agent in the morning to try to sus it out, but doubt I'll have much joy...
Wow! I've never seen anything like that.

I'd do what I would always do, work out what I think it is worth, then consider how much extra I'd pay just to play the game.

I was in a multiple offer situation this week in Brisbane and I thought that was bad! I had a good price in mind, added an odd number of thousands to try game it, and made sure the agent knew damn well that finance wasn't going to be an issue. (Oh, and success).

What suburb did you buy in?
We bought our PPOR a few months ago in Sydney this way. We had to put in our best and final offer. In the end of the day we tried to figure out a price that we would be disappointed to hear that it went for and we missed out. There's no point of submitting a lower offer than you would be happy to give because in the end of the day, you want to be holding up the trophy saying you got the place.

If you have decided that the place is perfect for you in location, price and style, then go for it. Even though people always say there's always another property, it is very difficult to see one that is perfect for you and you may not see one for 6-9 months depending on your taste.

The agent wants over 800k because the offer that is in place is over 800k. Normal preauction offer that will get it over the line in Sydney in this market is around 15-20% over price guide. That's just the market at the moment.

In regards to building and pest, it's not a major problem for apartments as there is building insurance with strata. You should get your solicitor to look over the contract (should be able to do it quickly) and get the 66W certificate.

Good luck. It can be pretty stressful, but that's normal. Let us know how you go.
If it is ticking all the boxes put an offer that you are comfortable that if it sold for more you would be okay.

I don't know what cooling off period but in Melbourne you get three clear business days from date of contract which you could do you B&P that way you can keep unco but someone else might be able to post about the rules for NSW.

I called the agent a few times this morning - he informed me that the vendors were happy to sell for anything above $800k and assured me (up until 30 mins before the deadline) that if I submitted an offer even slightly above $820k, I had a good chance of taking it - as that would be the highest he was aware of.

After a $230 strata report, complete contract review & amendment by my solicitor and submitting an offer in time, I got a call at 12:30pm letting me know that the property ended up selling to a higher bidder for $856,570 - 22.4% above the price guide zzz.

Guess I have to chalk this one up as an expensive lesson about the state of the Sydney property market at the moment!

In any case, thanks to everyone who posted for the input! Really appreciate it.
Bad luck. Did you end up putting in 820k?

If it's any consolation, you would have had to cough up the strata check and legal fees if you were going to auction anyway.

I know several friends and family that went through this process a few times and weren't successful. It's the market at the moment and it'll stay like that for a while considering there's probably another rate cut before the year ends.

Anything that is good on the market doesn't last more than 2 week nowadays. Auction clearance rates are above 85% at the moment which will tell you that people are buying anything.
Congratulate yourself for not paying more than you thought the property was worth and the knowledge you've gained out of this process.
Well, the offer which was accepted was above what you had determined that the place was worth and well above your own offer.

Go back and revisit how you determine value and/or your budget.
This was exactly how we secured a 3rd prop, this one a new PPOR to become IP (Northern beaches) back in June last year.

We had been looking properly for a good 6 mths and knew from the first second of the first inspection it was the one. We immediately did all DD and presented signed, unconditional contract with deposit cheque at our best price a few weeks out from the auction date.

Agent did exactly the same thing (absolutely correct in my view), and
1. advised the vendor to not accept and take it to auction
2. gave the other genuine buyers a chance to offer more

Luckily, noone else had their ducks in a row to put in an unconditional offer and the vendor was happy to proceed at our price. I am very confident it would have sold for a higher price (to someone else!) had it gone to auction.

I suppose the lesson in a hot market is 1. know your price/value and 2. have your ducks in a row and be prepared to move quickly, with luck you just may knock out the competition before they can throw a punch.

Best of luck with the search.