Receiving an offer before auction is a dilemma that vendors are lucky to face. It’s a compliment that an eager buyer wants to take your property off the market – your property and its marketing plan is obviously attracting interest. But, just how much interest?
If buyers are clamouring for property and the market is hot, vendors are often presented with multiple offers prior to auction – their conundrum is whether or not to accept, as it is likely that the auction will be competitive and successful.
However, if buyer interest seems low prior to auction, then accepting a pre-auction offer becomes a much more difficult decision.
A skilful real estate agent will be carefully gauging buyer sentiment around the property’s auction campaign, and communicating regularly with the vendor about it.
Signs of a ‘hot’ auction
Measuring the potential success of your auction can help you establish whether or not to accept a pre-auction offer. You can tell if your auction is shaping up to be hot by answering these questions about buyer behaviour:
- Have you had many buyers request building inspection appointments?
- Have you had a number purchasers request your Vendor Statement documents (known as Section 32 in Victoria)?
- Are multiple potential buyers coming back to inspect the property time and again?
If the answer is yes, you’ve likely got one hot auction on your hands with a lot of buyer interest and activity.
Pre-auction offers when buyer interest is high
Unless the offer presented to you prior to auction truly exceeds all of your expectations, you may be well advised to take the property to auction and let the buyers ‘fight it out’.
Offers made prior to auction must be exceptional in price and favourable in all conditions, as buyers are not just purchasing your property – they’re purchasing the right not to compete with the market.
What if buyer interest seems low?
Perhaps your property isn’t quite as inundated with buyer interest, and an attractive pre-auction offer presents itself. Should you still continue to auction day, or take the money now?
It all depends on the offer’s timing. Rather than passing your property in at auction – thereby allowing your key buyer to see there is no competition to drive their offer upwards – it may be strategically beneficial to negotiate a pre-auction sale in your favour. If the offer for your property is better than any other party has indicated, it may well be worth considering.
In Victoria, if an offer is made and accepted within three days of the auction date, there is no ‘cooling-off period’ for buyers. So, if the price is right, you are best to accept these offers.
Consult a real estate agent
It’s advised for vendors to first and foremost consult with their real estate agent. An agent can help to minimise the likelihood of an enthusiastic purchaser walking away from the sale, or a vendor unnecessarily accepting a pre-auction offer.
With the energetic and highly competitive real estate market taking off in Melbourne’s west, deciding whether to accept or reject a buyer’s offer prior to auction is a reality for many vendors. If your agent is a local expert, knows their market and, understands their buyers, you’ll be in safe hands.