Wait for auction or make early offer?

[Ali G]

Hi everyone,

What do you think: when you find a property you are interested in that is up for auction, are you best off to make an early offer or wait until the auction day and bid?

If you wait until auction day someone might beat you to the property with an early offer. Conversely, if you stick it out until the auction then you might not have much competition and it might go cheaper than you were willing to pay. Or then again, maybe it will go for more...

What are your thoughts and strategies? Would love to hear some stories about your experiences...

Hope you are all having a relaxing long weekend.

Cheers,

Ali G

 

[see_change]

Hi everyone,

What do you think: when you find a property you are interested in that is up for auction, are you best off to make an early offer or wait until the auction day and bid?

If you wait until auction day someone might beat you to the property with an early offer. Conversely, if you stick it out until the auction then you might not have much competition and it might go cheaper than you were willing to pay. Or then again, maybe it will go for more...

What are your thoughts and strategies? Would love to hear some stories about your experiences...

Hope you are all having a relaxing long weekend.

Cheers,

Ali G

Depends on how much you want it ......

Obviously the state of the market at that time is a very important factor, so I'd be keeping a close eye on comparable auctions, in particular maybe go to preceeding ones that the selling agent is holding , as that agents feedback to the vendor plays an important role in how the agent advises the vendor.

The best negotiating position to be in , is one where you're quite happy to walk away .

I'd try and get an indication from the agent on how open the vendors are to offers and what their indication is.

The way I do this is by indicating to the agent that I'm not actually interested in that property but am interested in finding out the sort of price it might go for in the current market.

How easy it is to get the info depends on the agent. Some will not give any information that they think will help you.

Many agents will not give you that information specifically about the property they're representing , but I'll ask them about a comparable house in that area with similar features and ask them hypothetically how much that might go for. I've had some situations where this has worked quite well.

If the market is fairly strong and it's a property is one you really want I'd think about a reasonable offer early on.

If it gets to Auction , the standard wisdom is not to bid untill the auctioneer says it's on the market.

See Change

 

[Smile]

I would wait for Auction Day but first I would let the Real estate agent know that you will be turning up with the intention to bid.

This is so he wont sell to the first offer before you get a crack at it

 

[kissfan]

Hi Ali G.

Agree with SeeCh when he says it depends how bad you want this property.

If you wanted it as PPOR it would not hurt to put in a "feeler" offer, even if it was a low offer, just to test the water, and see what response you get from the agent and vendor, but I am assuming you want to purchase as an investment in which case you could try the same, and if you get a negative response just waitl until auction day which will give you a bit more time to work out exactly how much you want to spend, and do a bit more research/due diligence etc.

Regards
Marty

 

[Freeatlast]

Ali,

The guys are right.....

Personally we hate buying at Auction, and will always offer beforehand..... At an auction you lose control of the situation.........

Cheers

Scott

 

[Ali G]

Hi guys,

Thanks for your ideas. We have seen a place we are interested in as a PPOR but we are quite possibly not able to qualify for a loan right now anyway. It just got me thinking about this in general.

The last time we made an offer on a place (as a PPOR) the property was up for private sale. We started with a reasonable offer (probably not low enough in retrospect) because we really wanted the place. We negotiated for a while, raising our price while the vendor reduced theirs, but in the end they didn't accept what was quite a high final offer of ours. The day they rejected this offer was the day I landed a place in a uni course for 5 years so we decided to walk away from it. The market had seemed to have cooled a bit and the place didn't sell for 4 months, and then only sold in the end (at auction) for about $1500 more than our final offer. It was the first time we had made an offer on a place and we didn't play our cards particularly well. The REA really played us, but that is our fault for not being more savvy. We learnt a few hard lessons that week! I guess you have to start somewhere.

Now that we are looking to buy again I guess I was just feeling out the offer-making and bidding processes. Any other tips you have would be much appreciated. I am an amateur at this.

Cheers,

Ali G

 

[quoll]

We learnt a few hard lessons that week! I guess you have to start somewhere.

G'day Ali G

I've found some of the best lessons have come from failures, or at least things that weren't a success. How can it be a failure when you learn that much from it?

On topic, put in an offer before the auction, worst case it shows you are interested.

Cheers
quoll

 

[Jamie]

G'day Ali G

I've found some of the best lessons have come from failures, or at least things that weren't a success. How can it be a failure when you learn that much from it?
quoll

Superbly said quoll.

Ali, it seems to me your last foray into buying was a great success - you didnt buy a property you might not have been ready for, and you learnt many lessons that are standing you in good stead this time around.

Wait and see what happens at auction - with current auction clearance rates below 40%, youre in a great position to approach a disillusioned vendor after the auction and go from there.

All the best,

Jamie.

 

[Ali G]

Thanks again everyone.

I agree, our last foray into trying to purchase a place wasn't a failure at all - the lessons we learned were BIG ones - however it was very frustrating and disappointing at the time. I guess you win some, you lose some, and you are just less accepting of this when you first start out and have high hopes that everything will work out as you would like.

I have another basic question and I know I have read the answer somewhere and just can't remember what it is... Say a property passes in at auction, does the highest bidder have exclusive rights to negotiation with the vendor or can any potential buyer enter into negotiations after the auction ends? If it matters, the question relates to auctions in Melbourne. Thanks once again...

Hope you all had a relaxing weekend!

 

[Kristine..]

We have seen a place we are interested in as a PPOR but we are quite possibly not able to qualify for a loan right now anyway.

Hi Ali

Make sure you are care-ful of your own interests.

On what basis would you make an offer now or at Auction, if you are not sure that you will qualify for a loan?

Auction conditions apply three business days before and three business days after the advertised auction date, and if a property is booked for auction it is not likely that a vendor will accept an offer conditional on finance approval.

The vendor will have committed advertising expense to the promotion of the auction, so if they tie the property up with a conditional offer they may spoil their own chances.

At auction, the property is sold 'on the fall of the hammer' and that's that. No cooling off, no 'subject to', sign it, you've bought it.

So unless you have a pre-approval for a loan to go the the auction with - or a very confident of raising the money - go but keep your hands firmly in your pockets.

Cheers

Kristine

 

[Ali G]

Hi Kristine,

Thanks for your (late night) sound advice! You are a gem. Yes, I am aware of the conditions of auction, but thank you for a timely reminder. It is a fair point also that you make about what the best option is from a vendor's perspective.

As for qualifying for a loan, the issue is not our ability to service a loan, rather our ability just to get a loan in the first place. We are looking into our options now and most certainly will not do anything rash until we have pre-approval. Thanks for your concern about this.

I hope you are well and that everything is chugging along smoothly with your son's first acquisition.

Cheers,

Ali

 

[demoman]

Hi Ali G

Hi Ali,

When considering purchasing your next place try & get inside the head of the seller. I've bought & sold houses and in my opinion it is much harder to sell, especially if you are in a position where you need to move on quickly.

That house you nearly bought was a good example of this........the person selling must have been in the doldrums after your purchase fell thru and then they were waiting for 4 months only to get a little more in the end. I'm sure the agent would have been under some pressure after you walked.

Now seems to be a good time to buy in that there are a lot of places for sale and fewer buyers. Play hard & be prepared to walk again if you're not happy.

Hope this helps.

Regards

Jared