Question: I want to make my next property purchase in inner Sydney and after doing my homework I’ve seen a Rushcutters Bay property listed for, what I reckon, is easily $90,000 more than it is worth. I’ve tried testing the waters by putting in an offer for $100k less than the asking price, but the real estate agent has come back to me saying the vendor is not prepared to negotiate.
I didn’t go further with the issue, but I’ve just noticed that the house is going up for auction soon. If the vendor stays vigilant on her price, I’m pretty sure the house will get passed in at auction, but then, who knows? Is it worth putting in another offer, even though the real estate agent made it pretty clear the last time that it was the listed price or nothing.
Answer: The best advice would be to go to the auction if you believe it will be passed in. Bid to just below your limit (allow yourself some room to negotiate) or just below what you believe the property is worth. If you are the highest bidder then the agent will negotiate with you first at the auction and you could secure it for what you believe its value to be. If you are not the highest bidder then it stands to reason that someone else believes it is worth more than you do and the agent will try and negotiate with them to secure a deal on the day under auction conditions.
If the agent made it clear that it was list price or nothing during the previous campaign then I do not see the benefit of putting in a formal offer, (unless he/she indicates that the Vendor Price expectations have changed). However, do stay in touch with the agent and let them know your price feedback. If they are doing their job correctly this should all be reported back to the vendor and can be a valuable tool in giving the vendor market feedback, which should hopefully help at the auction.
We are all guilty of believing our properties to be worth more than they are when selling and looking for a bargain when buying – it’s human nature. However, market feedback and time can be powerful tools in an auction campaign.
Make sure you have done all your due diligence before you go to the Auction – strata report, building inspection, comparable sales (what else has sold recently in that pocket of real estate, which is like for like) and check that your finance is in order.
- Answer provided by George Raptis, Metropole