John McGrath's seven tips for buying before auction

Auction clearance rates have improved substantially in many markets this year, John McGrath has recently noted.

"The clearance rate is up by about 20% on last year and hit a peak of 81% last week, acording to Australian Property Monitors.

"That’s a very strong rate of sale and reflects an increasing urgency among buyers to secure their next property before the market really takes off," he said. 

John McGrath saud when there was an urgency in the marketplace, "it’s not uncommon to see buyers making offers on properties in the first week of the campaign."

He suggests with many buyers having been sitting on the sidelines for years, "they’re more than ready to get a deal done now that the bottom of the market has passed." 

"We have been noticing a lot of pre-auction sales occurring in today’s market," he said.

"In a rising market, it’s to your advantage to secure the property without the competition of others.

"But if there’s a lot of interest in the property and market conditions are strong, the vendor will probably be more inclined to go through to auction.

"So if you want to buy prior, you need to play your cards right to entice the vendor to sell early," he advised on his blog. 

Here are his top tips for buying prior to auction:

Tell the agent you’re interested and ask if the vendor is willing to sell privately. If the agent gets a flood of offers after the first open and you haven’t made yourself known to them as a serious buyer, you might not get the chance to make an offer.

Let the agent know you have pre-approved finance. This is a very important signal that you’re a serious buyer.

Offer a price that is close to your walk-away figure. Vendors will only entertain the idea of selling prior if a premium price is put forward. As with all negotiations, the vendors will assume your first offer isn’t your best so leave some wiggle room.

Waive your right to a cooling off period to show you’re a serious buyer.

Do more than a verbal offer. The best way of showing you’re serious is by signing the contract and attaching a cheque for the deposit. Alternatively, put your offer in writing and mention you have your finance approved.

Offering odd amounts is a great tactic especially after making a couple of lower offers. For example, rather than offering $460,000 or $465,000, offer $463,500.  An odd amount suggests there’s some logic to your offer and it also implies that you’re at your financial limit.

Be prepared for a situation where you and another buyer are at the same price, so it will come down to a race to exchange. If neither of you are willing to offer more, it will be a matter of who can get themselves organised and in a position to sign the contract first.