7 tips for buying before auction.
While auctions may be a popular method of sale for vendors, this is not necessarily the case for buyers, with some finding auctions to be a daunting process they would prefer to avoid.
If you’re a buyer who falls into this category, and are looking to avoid the stress of having to bid against other buyers to secure a home, this blog outlines seven action items to help you snap up a listed property before it goes to auction.
Understand the property’s true value
Establish the true market value of the property. Research the history of neighbouring properties to understand local demand. Look at what has been sold and when it was sold, attend other open inspections and auctions, and compare the state of play. Robust comparable sales analysis and supporting documentation are your best chance at preparing an offer that is close to true market value yet meets the vendor’s expectations. Resources like CoreLogic and Domain are great for finding property insights.
Reach out to the agent
Building a positive relationship with the property’s real estate agent can help you understand the seller's requirements and uncover important information about the campaign. Ask the agent about the level of interest in the property – such as the number of contracts issued, and also request a property price guide to help inform your offer.
Discover the vendor’s motivation to sell
Knowing the vendor’s motivation to sell can help you prepare the most attractive offer to convince them to sell before auction.
Factors other than price can often play a role in a vendor’s motivation to sell pre-auction, such as timing, settlement periods and sentiment. They might also want to avoid the stress and uncertainty of an auction and instead seek a definitive outcome beforehand. Everyone has a different situation, so it’s always worthwhile taking time to understand a seller’s motivation.
Get your finances in order
Price isn’t everything when it comes to a sale – often, vendors are looking for a quick settlement with a buyer who has their finances in order. Be clear about how much you can afford and get pre-approval from your bank or mortgage broker so you can act quickly if necessary.
Make your offer
Agents are obliged to bring all offers to their clients. If you are attempting to get a scoop before auction, make sure your offer is enticing enough to convince a vendor to sell early. Remember to do market research and consider recent comparable sales as well as vendor expectations – i.e., the property price guide. Ultimately your offer needs to be high enough and/or provide enough upside, to convince a vendor that it is their best option.
Time it right
Timing is everything. If you make an offer at the right stage in an auction campaign, you could prevent potential buyers from even seeing the property. But don’t go too hard too early – a big offer too early in the campaign could raise a vendor’s expectation and give further motivation for a bidding scenario. Instead, aim to make your offer in the middle of the campaign.
Negotiation is all about give and take, and the price is not the only thing on the table. Other areas for negotiation include the length of settlement, deposit, existing tenancy, and fixtures or inclusions. Everything and anything can be up for discussion. No matter how stressful or intimidating the process gets, it is essential to leave your feelings at the door and apply pressure only if you are confident your terms are acceptable. Emotions and urgency can cost you a sale.
The process of buying and selling can sometimes feel daunting but you don’t have to go it alone - contact your local Belle Property office today for advice and assistance.
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