Do you hate auctions? You’re not alone. Private sales continue to be the preferred choice for buyers and vendors alike, but there has been a gradual shift towards higher auction numbers recently. This is especially the case in Melbourne, which has the biggest housing auction culture, followed by Sydney and Canberra.
A preference for private sales often lies in the freedoms it affords buyers, where private sales often come with cooling off periods (as opposed to auctions which often don’t) and an increased element of power for the buyer in controlling the direction of a sale. This is not to say that a bidder can’t play a significant role in how an auction turns out, they just need to know the tricks.
For the majority who prefer to avoid the stress and headache of auctions, here are eight ways to get your offer accepted long before you have to go to auction.
1. Go to inspections. These are a vital tool in your toolbelt. You will be able gauge your chances of acquiring an early sale by the popularity of that first auction. The busier it is, the less likely a vendor will be open to an early sale. However, busier or ghost town opens will tell you one thing…
2. Get in early. If you think it is a seller’s market and that the property will attract attention, get in early. Even if a vendor thinks they could get a bit more on auction, they may want to eliminate the headache of keeping their home clean for 4 weeks, going through the rigmarole of inspections and then the auction, potentially having the property passed in, and may even want to get out of the property and into their new home sooner than later. Making an offer before the first inspection may not yield results, but if you notice that the first inspection shows little promise, that is a good indication that the vendor will be open to discussions.
3. Make the offer reasonable and in good faith. Do not go back on this either. In Victoria, Statements of Information state the expected price range for every listed property in the state, so knowing what the vendor is after in terms of a price is easier than ever. However, do your research on the property and comparable properties in the local market to make sure you think it is accurately listed before putting in a bid that matches those expectations. Making your bid fair and a reflection of where you would likely be comfortable to go in an auction is a good way to restrict an agent’s ability to use other bids against you. If you do offer a lower amount than the vendor may expect, back this up with comparable sales figures.
4. Waive the cooling off period. An incentive for vendors to go to auction is that there is rarely a cooling off period following a final bid. You may consider offering this as a negotiating tool, if for a slightly lower bid than the vendor may expect to get at auction, as it shows you are interested in the property and don’t want to muck around with their time. It also indicates that you will not retract your offer once it has been accepted only to make a second, lower offer. This is a tactic employed that has resulted in auctions being seen as more of a ‘sure thing’.
5. Offer a larger deposit. This is obvious why it is an incentive, as it allows a buyer more wiggle room with which to look for their next home.
6. Be open to shorter/longer settlements. Being flexible and communicating this to the agent will communicate your interest in the property.
7. Be fair in your dealings with the agent. As much as you can, get the agent on your side. You can still be firm with your offers without being rude or abrupt. For instance, one firm negotiating tactic for private sales is applying a time limit to your offers, such as 48 hours.
8. Don’t be afraid to go to auction. Brush up on bidding techniques that you can use in case you do go to auction. Knowing these, such as controlling the flow of an auction in real time, can translate well to dealing with an agent in the still relatively high-tension environment of a private sale.