Pre-auction offers

Pre-Auction Offers

Just because a home is advertised for auction does not mean you have to wait ’til 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 per cent of all auction sales have been sold before the day of the auction; this compares to 19 per cent 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 per cent to the present-day 18 per cent.

Over that time there has been a 20 per cent 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 them not to wait ’til 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 ’til the auction.

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

Source: REIV