The auction process can be intimidating and many people wonder if they should just jump in and start making offers regardless of the auction date. Unfortunately, the answer isn’t black and white; every auction is different and every seller has their own motivations and incentives to sell early or hold out. However, if you’re thinking of making an early offer, you should understand the pros and cons of doing so. This will help you decide on the best buying strategy for each property.
EARLY OFFER ADVANTAGES
Avoiding The Anxiety
The anxiety of waiting for auction day can contribute to buyer’s fatigue and send you round the bend. Making an early offer could potentially help you avoid the waiting, making it a much less anxiety-ridden time. You know the exact price that you’ll be paying and won’t risk getting caught up in any heated public bidding wars.
Clearing The Competition
Your early offer sets you apart from the other buyers and highlights you as a serious contender. If the level of interest isn’t as high as the seller had anticipated then there’s a higher chance they’ll want to accept your offer.
Flexible Sale Contract
Making a pre-emptive strike means that the terms of sale have the potential to be negotiated. Generally, a five day cooling off period is written in for just this circumstance giving you breathing room in order to get the valuer out to the property and organise your finances. You could also potentially renegotiate the settlement period or the deposit percentage.
EARLY OFFER DISADVANTAGES
Fuel Expectations
If you go in too high, there’s a danger that you could fuel the vendor’s expectations and become the fallback as you’re the first to name your price.
No Cooling Off
Bear in mind that if you put in an offer within 3 days of the auction, then there won’t be a cooling off period.
Limits Bargaining Power
It’s worth considering that should the property not sell, by making an early offer, you may be limiting your bargaining power.
QUICK TIPS
Have A Plan
A pre-auction offer could potentially push your price higher than at auction. Make sure you’re always thinking three steps ahead.
Heads Up
Instead of being the first to reveal your hand, tell the agent you’re happy to wait for the auction day but ask them to contact you if an early offer is made.
See It First
Ask to see evidence of other offers so you’re not hoodwinked into competition with a fictitious buyer.
DIY Research
Do your own research and don’t engage the agent on discussions of price range.