Victoria - "Sale by Set Date"

We will be inspecting a property in Melbourne this week - the ad has just come onto the web, and I noticed that the property is being marketed as "Sale by Set Date" (which is a trademark of the particular agency group).

As a banana-bender, I find this a somewhat 'different' concept :confused: and was wondering if any knowledgeable Victorian SS folk would care to enlighten me as to the pros/cons of this sales method and comment on possible strategies/approaches. Thanks!

Cheers
LynnH
 
We will be inspecting a property in Melbourne this week - the ad has just come onto the web, and I noticed that the property is being marketed as "Sale by Set Date" (which is a trademark of the particular agency group).

As a banana-bender, I find this a somewhat 'different' concept :confused: and was wondering if any knowledgeable Victorian SS folk would care to enlighten me as to the pros/cons of this sales method and comment on possible strategies/approaches. Thanks!

Cheers
LynnH

I hate this method as a purchaser, but may be really beneficial to vendor (in a bull market). From my understanding, it means that the property isn't taking any offer in until a "set day", and the property will be exposed to market for as long a period as possible. All the offers will be taken in by the same day and the best offer will be accepted. I witnessed the power of this method first hand. A property in Wantirna South was asking for 320k+, and was sold for 398k. The property was opened for 3 weeks and there were at least 50 ppl going in there every time it's opened.
 
Pros / Cons for the vendor:
-Encourages Purchaser to submit their best bid or the may "miss out"
-Not as costly as Auctions
-May not be able to capitalise on a bidding war of a live auction

Pros / Cons for the purchaser:
-Prevents negotiation with the vendor which works against you in a buyer's market (unless you are prepared to submit a low offer and run the risk of not getting it)
-Prevents a bidding war against other bidders which works for you in a seller's market. (If you put in a realistic offer + a bit more to clinch the deal you may get it for much less than a hot auction).
-Allows conditions in your offer
-Allows the vendor to reject all offers. If this happens make sure any further negotiations are with the vendor (ie make him name a price and go from there) and not against another bidder (ie dont get suckered into a blind bidding war).

Pros/Cons for the agent
- Limits marketing campaign to 1 month (usually)
- Limits time / phone calls spent on negotiations
- High likelyhood of closing the deal on the set date and earnig commision (easy to pressure vendor into choosing one of the offers)


In the current Melbourne market I think this is a good oportunity for you as the buyer and a mistake on the vendor's part. I think you need to decide what the property is worth based on current market value and (if you are serious about buying it) make a strong bid. I would also try to get the REA to take an offer to the vendor before the set date with a short expiry on your offer. Just say that you want the vendor to consider your offer before you go and bid on other properties. You may get lucky if the offer is good and the terms are favourable.
 
I hate this method as a purchaser, but may be really beneficial to vendor (in a bull market). From my understanding, it means that the property isn't taking any offer in until a "set day", and the property will be exposed to market for as long a period as possible. All the offers will be taken in by the same day and the best offer will be accepted. I witnessed the power of this method first hand. A property in Wantirna South was asking for 320k+, and was sold for 398k. The property was opened for 3 weeks and there were at least 50 ppl going in there every time it's opened.

The "process" might depend on the RE agent - we're dealing with some "Sale by Set Date" properties - the process is that you can make an offer anytime between now and "set date". Once your offer is made, if Vendor accepts offer, all other interested buyers have 24 hours to make an offer of their own - after that period, all offers submitted to Vendor and decision made. Your offer is not disclosed to other interested buyers (well, that's what they say anyways) - the idea is to put your very best offer in from the beginning.

Cheers,
Jen
 
So it sounds like a "sale by tender" that we have sometimes here in Brisbane. I hate sale by tender with a passion.

Wylie
 
The "process" might depend on the RE agent - we're dealing with some "Sale by Set Date" properties - the process is that you can make an offer anytime between now and "set date". Once your offer is made, if Vendor accepts offer, all other interested buyers have 24 hours to make an offer of their own - after that period, all offers submitted to Vendor and decision made. Your offer is not disclosed to other interested buyers (well, that's what they say anyways) - the idea is to put your very best offer in from the beginning.

Cheers,
Jen

Yes, this is the process being used with the property we are considering. Am still trying to get my head around all of this. :confused: We had originally planned to stay on for a few days early next week to inspect other properties, visit agents and 'get a feel' for the market, but hubby now has to go back to work earlier than expected, so that's not going to happen.

Have done my DD and have pretty much worked out my 'walk away' price (subject, of course, to inspection). However, if anyone can offer any further suggestions or comments, they will be most gratefully received! Thanks!! :)

Cheers
LynnH
 
Hi Lynn,

I think this is the same REA that I'm dealing with in the same locality.

This particular REA told me that they've abolished the 380k+ (plus) method and advertise properties for say $380k, meaning if only one person makes an offer for $380k they will sell. Of course if there are other interested parties and they offer more they will take the higher offer.

We've been invited to make an offer on a unit which hasn't been advertised either on the net or a board. It came on the market on Friday, and the S32 came out yesterday. The offers must be made by 6.30pm tonight (Wednesday). The REA said it works on a one offer only basis.

The REA suggested it will sell for low $400s. We're considering making an offer for $380k (they're asking price). If we get it well that's good news, but we expect we won't. This is our first IP offer, so we're treating this making an offer process as 'education'.

It goes against everything you read about purchasing an IP, buying below cost etc knowing there will likely be 'emotional' buyers purchasing a home.

I must admit it's a very creative strategy by the REA, and one I'd be happy to use if I was selling!

Good luck !
 
This method (or similar) is prevalent in Mel. at the moment. More so in the middle and outer regions. The Mel. market is hot....you better believe it. We've bought several houses/units recently all by this method (or similar). It still basically boils down to the same thing ...highest offer generally get's the deal. On one we were not the highest bidder ( or so we were told) but we got the deal with a cash - unconditional offer and 30 day settlement. It does depend on the integrity of the agent. Nobody is meant to get a second bite but how do you know ? The process should be more public in my opinion. Sealed bids with a public opening with all bidders in attendance would seem in order. But, for now, work out your best price and "take your punt". Also, you gotta get used to how much the agents are underquoting ...for some it's as much as 20% ...so if they say $300K expect the deal to be done around $360K. Some agents are more like 10% to 15% "under. But it is "fair dinkum"... just check the prices in Sundays and Mondays paper and you'll see the sales figures. They are the real world at the moment. Good luck.

LL
 
A house (also 3 bed) on a large block in the same street sold last week for $386k but was asking $340k.

In our opinion, a unit although newer shouldn't be worth more than a house a few doors down on a 3rd of the land.

At the end of the day it's worth whatever the highest bidder is willing to pay - that might be $380k or $420k.

I'm starting to see the value in Buyer's Advocates!
 
Well the unit sold for close to $420k!

I'm now interested to see how many other offers were put in....if there was only one other offer it means they paid $40k over the asking price because they 'really wanted it!'
 
That's my thoughts also ..... In the sales we've competed in all we know is either we won .... or we lost. I'd love to see legislation (like I understand Sweden has, for example) that ALL offers MUST be made public. That would make the process much more transparent.

LL
 
The REA told us today there was only one other offer of $420k.

So they paid $40k over the asking price for no reason other than to 'secure the property'. Buying with their hearts and not their heads.

I sure hope they didn't purchase it as an IP!
 
Thanks to all for your replies and PMs - much appreciated! There is plenty of food for thought!!

We leave here at crack of dawn tomorrow (forgot about Philip Island motor cycle grand prix - didn't book tickets until late :( ). It promises to be an interesting weekend - if anything instructive or educational comes of it, I will update this thread later!

Cheers
LynnH
 
Even if they paid $40K too much ....in 10 years their investment will have doubled and they will have made $380K from that IP (I deducted the presumed $40K "over spend" .)

But the under-bidder will have made ....ZIP ! Plus he has wasted "time in a rising market" locating , researching, bidding, waiting etc ...which can be very expensive time.

You gotta be in it to win it !! Buying at "the right price" is fine if you DO actually buy.


LL
 
We're buying alright...but we want to make $40k immediately when we buy...not wait 10 years to realise the capital growth!

I think the REA have a lot to answer to with the 'rising market'. Had they not talked up the price to both bidders saying low $400s, someone could have walked away with that for the real value.

Could the new owner sell it for $420k tomorrow? Maybe. Maybe not.
 
Sorry ..but rising markets (like Melbourne at the moment) just don't permit bargains at $40K "savings" IMHO. The climate requires a more aggressive buying strategy. And you don't have to wait 10years for CG if the markets rising. IPs we bought just six months ago are already worth about $50K more each than we paid...but on-the-day we bought they "looked" expensive. Could the punter sell it again for $420K ? ...depends on how desperate a seller he is. But , whether that occurs or not THAT sale at $420K WILL cause the expectations of other vendors in that street/area to rise. REAs who are trying to win a new listing will use it for their benchmark.

It's a rising market . It's not going to get any easier in the near future. No good cursing it. Use it !!

LL
 
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