So you have found the home of your dreams, but it is listed for an Auction or Expressions of Interest campaign closing in four weeks and you don’t want the stress of bidding – you just want to secure it as yours. So what do you need to do to make a pre-sale offer that a vendor would consider accepting? Here are our top six tips for making your pre-auction offer an attractive option for the vendor:
Do your research
While this key piece of advice may sound like basic common sense, it is not unusual for emotions to take over and potential purchasers to rush into negotiations without sound research. It is always wise to look at recent sales of comparable properties in the area, and if you can, find out how their auctions went. Were there plenty of bidders for a particular property or did it get passed in? Is the local market strong, or showing signs of cooling off? How many similar properties are there on the market? By becoming familiar with the selling conditions, you will be in a better position to make a reasonable assessment of the value of the home and set your offer price accordingly.
Speak to the selling agent
Don’t be afraid to have a chat to the selling agent. Discuss your intention to make an early offer with the agent, and ask for their guidance on what the vendor would regard as a realistic offer, and what incentives you could make to improve your chances (see Tip 4 below)
Time it right
Timing is important. Make an offer too early, and the vendor may reject it in favor of seeing what other interest the listing attracts. Make the offer too late and the vendor may have become welded to the prospects of the upcoming auction. There is often however a window of opportunity in the middle when vendors are just as keen to be done with the marketing and open inspections, as the buyer is to be done with waiting.
Be prepared to tailor your offer
The home in your sights could be on the market for all sorts of reasons, and the personal circumstances of the vendor could mean that a realistic early offer may suit them perfectly. So be prepared to tailor your offer to fit the needs of the vendor. Often this has nothing to do with upping the value of your offer, but being more creative or flexible about the terms of the sale or settlement. In a recent domain.com.au article, valuer Greville Pabst of WBP Property Group suggested a number of ways that an offer could be made more appealing to the vendor, such as offering a larger deposit, making an unconditional offer, tailoring the settlement period to suit the vendor. “If your purchase is for investment purposes you could also rent the property back to the current owner in need to sweeten the deal.”
This is the Golden Rule, says RT Edgar Director Mark Wridgway. "A purchaser would need to make an offer to meet or exceed the vendor's expectations as the vendor needs to be convinced that there will be no better offer on auction day." As mentioned above, the ‘value’ of the offer may not always be simply one with the most dollars, but a combination of monetary value and suitability to the vendor’s needs. If you have done your research and have a fairly good idea about what the property is worth, you’ll be in a better position to estimate what the vendor may accept.
If all else fails, try again
Remember, making an early offer that’s rejected certainly doesn’t prevent you from upping your offer to negotiate with the vendor, or coming along and bidding on Auction day.