Process & steps to making a pre-auction offer - Set up for success !

So, you want to make an offer PRE Auction ?

You may find Agents being a little apprehensive about pre-auction offers and not completely understand why that is.
This guide will explain the reasons Agents must be VERY careful with pre-auction offers and how you can present your offer in a way that is acceptable whilst improving your chance of being accepted.

Why must Agents be so careful with pre-auction offers?

An Auction campaign is very different to a private treaty campaign, And Agents follow a completely different process to achieve the outcome for the client during an auction campaign.

With the auction process, An Agent must be careful what information and feedback they put in front of their vendors as managing the vendors expectation is crucial and must be done delicately to ensure the optimal result is achieved at the auction.

“Offers” are essnetially market feedback, And some of the most high impact market feedback a vendor may receive, SO many Agent’s from the onset of an Auction campaign have a standing agreement with their vendors that no offers will be provided to the vendor unless the offer meets a pre-determined criteria to authorize its veracity and quality.

What is the typical criteria setting for a “pre-auction” offer:

• Price: The offer must exceed a specific pre determined price point for it to be considered for presentation, We do not want to present offers that are too low to the vendor as its unnecessary to put stress on the vendor and affect their interpretation of the market by giving them too many offers during the auction.

• Terms: The offer must provide an equal or better outcome to the vendor than the one available at the auction itself - Auctions provide an opportunity for the vendor to sell under auction conditions meaning an unconditional sale with a full deposit available on exchange of the contracts and an immediate irreversible transaction without a cooling off period.

Steps to making a pre-auction offer that will be considered:

1. Contract Review - Firstly send the contract of sale to your conveyancer for review, This is an elementary part of the procedure for ANY property transaction.
   Ask you conveyancer to make any requests they requires to the contract directly to the vendors conveyancer, Once these requests are negotiated on and amended within the contract you have an actionable contract that can be exchanged.

2. Confirmation of Pre-Approval - In the event your offer is accepted you will be expected to exchange/sign the contract immediately so prior to making an offer double check that you will have the ability to attain finance for the property should your offer be accepted - You will not have the luxury of getting a valuation during a cooling off period with a pre-auction or auction sale.
   if your offer is accepted the bank will only value the property AFTER the transaction is unconditional so you need to be prepared for that.

3. Building & Pest Inspection - There is no point in making an offer that cannot be exchanged on unconditionally straight away if it satisfies the vendor.
   As agent’s the last thing we want is to present an offer that is accepted only to be told by the purchaser “sorry I cannot sign anything until I have a building & pest inspection..”
   This only serves to confuse the vendor and interfere with auction procedure - Also worse, It often leads to disappointment when offers are accepted and then not exchanged on as purchasers may find something they are unhappy with in the property and choose not to proceed, Further agitating and unnecessarily interfering with the vendors interpretation of the market.

   
   So, If you want to make a pre-auction offer proceed as if you would if you were preparing for the auction itself, i.e. :
   Complete all of your due diligence up-front and be ready & willing to sign unconditionally should you be successful with the offer just as you would at the Auction.

   Hopefully your offer is accepted but even if it isn’t remember be completing these basic due-diligence tasks you have also automatically now prepared yourself to attend and bid at the auction with confidence - And you never know, Often people do not have their pre-auction offer accepted but are pleasantly surprised to attend the auction and secure the property for an even better price than they expected !