Expert Advice with Kate Forbes 05/04/2018
With some property markets slowing and auction clearance dropping, vendors are getting nervous – which means conditions are now ideal to buy great quality properties before auction day.
As a buyer, it’s a huge advantage to be able to snap up a fantastic property without the stress of engaging in a potential bidding war.
But what does it take to be able to snag the property you’ve been chasing, by convincing the seller to sign a contract and accept your offer prior to the big day?
There are a number of reasons why a vendor might be willing to sell before auction.
1. Auction nerves
Vendors are nervous creatures and auctions carry a lot of emotion.
Many vendors are pushed into auction as a sales method by commission-hungry agents, but they would be much more comfortable with a calm, pre-auction negotiation.
Play to these sensibilities and offer them a way out of auction-day adrenaline, and it could be a win-win for all concerned!
2. The sellers are elderly
Elderly people can be more worried and stressed by the emotional rollercoaster of selling than younger property owners, so if the property is currently owned by older folk, you may be in luck.
Be prepared to be flexible on settlement terms, as these vendors may face challenges if asked to move quickly – they could be relocating into retirement living and be restricted by availability, or have health or mobility issues that are holding them back.
Adopt a considerate approach, and along with saving them from the stress of an auction, you’ll really be their knight in shining armour.
3. The clock is ticking
If the vendor has time pressures – for example, they’ve already bought elsewhere and are keen to sell without delay – they may be happy to accept “a bird in the hand” rather than risk the property passing in on auction day.
This is especially handy if you’re flexible on settlement terms, as it gives you extra ammunition in your negotiation arsenal.
4. Buyers are thin on the ground
If there is little other interest in the property, the selling agent may encourage the vendors to take your offer, fearing a fizzer of an auction.
If not, you can still wait until auction day, let the property pass in, and then try again.
Of course, this could backfire if a surprise bidder shows up on the day of the auction, but if the lack of interest prior is any barometer to go by, this may be unlikely.
You’ll have to make the judgment call for yourself…
5. The agent is in a hurry to move on
Ordinarily, the selling agent is not a buyer’s best friend.
Remember, they are working in the interests of their client, the seller, so giving you a helping hand is not at the forefront of their agenda.
However, if the agent is in a hurry to offload the property so he or she can move on to the next sale, you may be in luck.
This could be the case if they’ve managed the listing for a long time, they’ve invested their own money into the marketing, or the vendors are particularly difficult to deal with.
A buyer’s agent can be helpful in situations like this, as they may be privy to info that the agent wouldn’t disclose to you as a everyday punter.
6. You have offered a premium price
At the end of the day, money talks.
If you offer a high enough price, you may just convince the vendor to sell prior to auction day.
It can be tempting to go in and present your highest offer, in the hopes that the vendor will accept it, rather than risk going to an auction that may not yield a positive result.
However, you do need to proceed with caution, as sometimes generous early offers can inflate a vendor's confidence and make them even more determined to seek the highest price possible come auction day.
These are just some of the strategies that can work in securing a property before auction day.
My advice is to always put your best foot forward by making the strongest possible offer.
This doesn’t always mean the highest price, but it could mean tailoring your terms to their needs, being flexible on settlement conditions, and attaching a healthy deposit to your offer.
With so many factors in your favour, it would be a very enticing deal that your vendor may find simply too hard to refuse.
Kate Forbes is a National Director at Metropole Property Strategists. She has 15 years of investment experience in financial markets in two continents, is qualified in multiple disciplines and is also a chartered financial analyst (CFA).
She is a regular commentator for Michael Yardney’s Property Update
Read more Expert Advice from Kate here!
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.