Hi Guys,
As you probably know from my million other posts I’m looking at buying properties that are going to auction, I’ve just found out that one of the properties has owners who are desperate to sell, and the other i’m interested in is actually in the possession of the bank… I am in the process or organizing valuations, building inspections and everything and was wondering if you think its worth putting in pre auction offers on either of the properties, or just go straight to auction? Pro’s and Con’s would be great
Thanks
If you have discovered the vendor's motivations to sell eg divorce, property settlement from estate, keeping bank off their back etc then it is a good start. You will need to determine whether they are then sufficiently motivated to sell prior to auction – an agent must present any offer to the vendor regardless of method of sale.
In some instances the vendor may be able to hold out until auction, esp if there are plenty of interested parties however they may wish to sell asap so there is no harm in trying – if you don't ask, you'll never know. If you do make a pre-auction offer, it will need to be subject to the same conditions as per the auction ie unconditional/no cooling off period as the vendor will not take the property off the market if it is not an unconditional offer.
Good advice above.
I have never seen a bank take a pre auction offer.
Pro's- you may get it cheaper.
Cons you may pay more. You won't know unless it goes to auction. I have seen people get properties cheaper than their limit.
Con- you have shown your hand (if you put in offer and it's not accepted). My experience is that agents just want to gauge the market and don't often encourage vendors to accept pre auction bids. They now know your max and may put in a vendor bud to raise it to your limit (if the auction stalls). I would not put a pre auction bid in at my max price.
Personally I would always go to auction unless I put in an abslute crazy bid (meaning very low).
I guess it comes down to knowing what the vendor is after. Sometimes you can negotiate around that. But at auction they get lots of attractive terms- no pulling out, quick settlement etc.Most people don't like auctions so unless the place is unique there is a chance you'll get it under market price.
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