Why pre-auction offers can be to a buyer’s advantage

Why pre-auction offers can be to a buyer’s advantage
Enzo RaimondoDecember 8, 2020

Just because a home is advertised for auction does not mean you have to wait until the day of the auction to bid for it. 

Through the real estate agent you can make a pre-auction offer to the vendor. 

So far this year, 18% of all auction sales have been sold before the day of the auction; this compares with 19% at this time last year. It is interesting to note that over the past six years, the proportion of homes sold before auction has reduced from around 23% to the present-day 18%. 

Over that time there has been a 20% chance the home will sell before – so, if you are interested, it is sensible to consider making an offer, lest you miss out. 

With that in mind, there are a number of advantages in making an offer, even if the offer fails. 

A successful offer can allow you and the vendor to avoid the auction itself. It is also the case that, even if your offer is unsuccessful, the vendor is less likely to sell to a higher bidder without giving you another opportunity to make an offer

If you do make an offer, it has to be an attractive one that gets the vendor’s attention and convinces him or her not to wait until the day of the auction. 

There are several things you can do to make the offer attractive: first, put the offer in writing; secondly, attach a time limit after which the offer expires. In some cases, presenting the offer along with a cheque for the deposit can really show the vendor that your offer is serious and that they may be better off not waiting until the auction. 

It is also always advisable to get legal advice before signing the contract of sale.

Enzo Raimondo is CEO of the Real Estate Institute of Victoria.

 

 

Enzo Raimondo

Enzo Raimondo is CEO of the Real Estate Institute of Victoria.

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