Ways to secure a property before auction day
Buying a house at auction can be a stressful experience: you don’t know who else will be bidding, or how high they are willing to go. Then there’s also the added challenge of sticking to a budget in an intense, high-pressure environment.
That’s why many buyers would prefer to make a pre-auction purchase and settle a price before the property can go to auction. It might seem impossible or difficult to navigate, but it is not unheard of — depending on how you go about it.
Remember, sellers may be just as open to accepting an offer before auction day as buyers are interested in making one. They might be interested in selling sooner, or they might prefer to avoid the stress of not knowing if their property will sell at auction, or for how much.
Unfortunately, there is no fool-proof system that can guarantee that you are successful in buying a house before auction day. However, there are some things you can do to put yourself in the best position possible for success.
1. Offer an odd amount
Making an odd pre-auction offer is a classic negotiating tactic that will give the impression that it is a highly considered number, or that it is everything you are able to offer.
For example, an offer of $550,000 appears very even and well-rounded. Offering $550,700 is an odd number that will suggest that you have pulled together all of your funds and resources to add that last $700, and that you want the property enough to throw it all into the offer.
Naturally, the offer would need to be high enough for the seller to seriously consider it, but the odd amount could help to finalise the deal.
2. Make a pre-auction offer that’s close to your walk-away figure
When you walk into an auction, you should do so knowing your walk-away figure. This is the number at which point either you are not willing to pay any more, or your lender has not authorised a higher figure for your home loan.
In order to convince a seller not to risk selling at auction, they will need to see an offer that they would genuinely be happy with on the day. Making an offer that’s close to your walk-away figure would demonstrate to the seller that you are willing to pay for the property — and that you’re serious about the bid.
3. Do your research on the market
Even if you’ve only just started house hunting and have set your sights on this property, it’s still important to do the research and get to know the local market.
- House values and sales prices for similar properties in terms of features
- House values and sales prices for nearby properties
- Local auction success rates
- How long properties typically stay on the market before selling
- How long this property has been on the market (you can typically find this on the listing on Domain.com.au or Realestate.com.au)
- Upcoming construction projects nearby that could increase the value of the property
Getting a good feel for these factors will help you to understand the true value of the property you wish to purchase.
It should allow you to estimate the minimum and maximum sale price it will go for, and therefore help you make a fair offer that is representative of the current market – and that the seller will recognise as a good deal.
4. Put your offer in writing ahead of the property auction
It’s hard to turn down a good offer, especially when it’s written down and confirmed.
The property may have been on the market for a while, or the owner may even be looking for a quick sale. In any case, a solid offer confirmed in writing can be very tempting, especially if the seller is concerned about how the auction will go. It may also help to put an expiration date on your offer so the seller has to seriously consider it (or else they risk losing out on a guaranteed sale).
This can also give you an edge over other pre-auction offers that are only made verbally.
5. Get to know the sales agent
When you visit the home, spend some time speaking with the sales agent and building a relationship with them. This can work in your favour in several ways.
For example, the agent may be able to tell you about things other than money that the seller would ideally like as part of the sale. That could be a shorter settlement period, or even a preference for the eventual buyer to not make changes to a certain feature of the property.
An agent can also tell you about other interested parties, whether the vendor is interested in pre-auction offers or not, and other useful insights.
6. Work with a home loan broker to get pre-approval
You need to ensure you have an approved loan so you can make a pre-auction offer. Rateseeker’s qualified mortgage broker team can help you get approved for a loan, and support you throughout the auction process to ensure you get the property of your dreams.
Contact us today to claim your free, no-obligation consultation.
** General Advice Warning
The information provided on this website is general in nature only and it does not take into account your personal needs or circumstances into consideration. Before acting on any advice, you should consider whether the information is appropriate to your needs and where appropriate, seek professional advice in relation to legal, financial, taxation, mortgage or other advice.