How to make an offer before auction day
A few weeks ago we made a fuss of this one-bedder in Northcote. Later, the agent, Evan Wailes of Love & Co., told us they had a remarkable six offers on the property before it went to auction. All of them were submitted by young singles or couples.
Is trying to secure a place before auction day the secret to getting into the market? According to Evan, it’s unusual for so many people to make an offer on an apartment in advance - it highlights the lengths aspiring millennial buyers are going to. ‘It certainly shows that the location, aspect and tasteful finishes resonated,’ he says.
How do you know whether your offer’s going to catch the attention of the vendor?
‘If a quoted range for a property is $350,000 - $400,000 and it's attracting 10 groups through an open for inspection then there is some comfort that those groups see value in the property at that range,’ Evan explains.
That means trying to nab it for less than the suggested price probably won’t fly. Making an offer within the range might not be enough to start the sale process either. ‘It’s fair to assume that on auction day a similar result will occur through competitive bidding and so these offers are generally turned down or put on the back-burner while the campaign runs its course,’ he says.
Most agents build the cost of the auction into their overall marketing fees, so there’s not much to gain selling prior unless the price offered is too good to refuse. The only real advantage is avoiding the anxiety of the auction itself.
‘Where a buyer is successful in purchasing prior to auction, they are fairly aggressive with putting a best and final offer forward,’ Evan adds.
Although some people liken this to underquoting, he argues that a reserve within the range would likely be set on the big day and there would be hopes to exceed it, so there's little difference. ‘Making an offer beyond the range is certainly going to start some more serious conversations between the agent and vendor regarding whether they should bring proceedings forward and sell prior.’
Ultimately, making a head-turning offer prior to the fall of the hammer will push you over the quoted range, but it could also save you from a bidding war that exceeds your budget on auction day.
How to make an offer
‘The process for submitting the offer can vary depending on the agent,’ Evan says, but generally, it’s not wise to leave it until the last minute, as verbal and email price negotiations aren’t enough to be considered formal offers.
‘I deem an email of your price and terms to be an extension of a conversation,’ he says and adds if you’re serious you need to allow the time to get that offer documented in a contract.
Evan’s final tip: if you love the place then it's wise to make an offer and negate the auction process or you risk losing it. ‘If the property ticks all the boxes and you're comfortable with the value based on comparisons, then think about the number you'd be bidding up to at auction and put that forward,’ he concludes.