Buying a Property before its Auction Date

20th May, 2021 | Refinance

In this article:
If you've found the right property, consider making an offer before its auction date to root out competition. Here's our take on what you can do to make a successful pre-auction offer.

#1 Do your research

Invest time in evaluating your property. Rely on information from historical sales data of the suburb and reputed property valuation websites. You could also turn to your mortgage broker for guidance on the correct price of your property. Making an offer involves having the right estimate for the property price. For more information on how to value your property in a booming market, click HERE.

#2 Don’t make a low offer

While making an offer, don ’t go below the estimated value of the property. Make an offer that’s above the lower end of the estimated value. For instance, if your research shows that the property price is in the range of 1.2 million to 1.3 million, there’s no point in making an offer of 1.2 million. Low balling your offer will significantly impact your chances of a successful negotiation.

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#3 Don’t share the maximum amount you can offer

Depending on your circumstances, the property you are looking to buy may be well below the maximum amount you can pay or very close. Either way, informing the seller of this figure could limit your negotiating position.

#4 Be prepared to make a reasonable deposit

An offer typically requires about 10% cost of the property as a deposit. Offering a higher deposit may improve your chances of a successful purchase.

#5 Be organised and ready to pay

Have your finances and all necessary approvals in place. Your ability to make a fast transaction is crucial to closing the deal. Assure the seller or agent that you have everything in place and are in a position to release funds reasonably fast. The most straightforward approach to making this happen is to use a mortgage broker. A mortgage broker usually receives a commission upon settlement of a loan. Their services are therefore generally free for borrowers. In addition to finding the right home loan product, your broker can also help with property value guidance and your loan paperwork.

#6 Be reasonable with your timelines for a response

While you don’t have to let the agent or seller leverage your offer to get a better price. Do give them a reasonable timeline. Forty-eight hours is usually a good period for the seller or agent to revert. Do not be pushy or follow up during this period. After a lapse of the decided time window, if you’ve received no response, assume that your offer hasn’t been accepted.

#7 Be prepared to walk away

Despite your best efforts, if the seller isn’t willing to proceed with a purchase, it’s best to keep emotions at bay and get ready to attend the auction. Under all circumstances, avoid going beyond your pre-approved amount or the right estimated property price you have in mind.

Reach us for the best way forward as per your circumstances.

The information is a compilation from various sources for your benefit and should not be relied upon in lieu of appropriate professional advice.