How to secure a property before auction
Trying to buy a property at auction can be nerve-racking, especially if you haven't done it before. If you want to avoid the stress that comes with buying at auction you can always try to secure the property before the big day.
The problem is that 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, says John McGrath, chief executive of McGrath Estate Agents. "If you want to buy prior, you need to play your cards right to entice the vendor to sell early."
So what can you do to boost the chance of your pre-auction offer being accepted? First, do your research.
"Know what a property is worth by doing your homework on other comparable sales," says Chris Gray, chief executive of Your Empire.
This will help you work out how much you should offer. Gray says that you should make sure you put in a fair offer. "If you go too low they're not going to take you seriously and you'll annoy them," he says.
McGrath recommends offering 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," he says. "As with all negotiations, the vendors will assume your first offer isn't your best, so leave some wiggle room."
Offering odd amounts is a great tactic, especially after making a couple of lower offers, says McGrath. "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."
It's also important to build a strong relationship with the agent, says Gray.
That way they are more likely to let you know how open the vendor is to offers, whether any other offers are coming in and if there are any changes etc. "Ensure they know that you are pre-approved, ready to go, know what you want and can make quick decisions," says Gray, who also suggests giving them a deadline to accept or reject the offer.
Another great technique is to 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," says McGrath. "Alternatively, put your offer in writing and mention you have your finance approved."
Waiving your right to a cooling-off period can also entice sellers because they know that you really do mean business. Of course, make sure you speak to your solicitor before doing this and have the building and pest inspections out of the way.
Find out if there is anything else, other than more money, that the buyer might want. For example, agreeing to a shorter or longer settlement period might be what gets you across the line.
You should also be prepared for a situation where you and another buyer are offering the same price, so it will come down to a race to exchange, warns McGrath. "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," he says.