Making an offer before an open home

[P.Bateman]

Hey Guys,

Very new to this game of property investing. The market is pretty hot right now and reading the threads on here there's a lot of people who advocate being the first to view the property outside of the open home process. I've seen some houses advertised this week and inquired about whether its worthwhile walking through before the open home on the weekend. The agents have been interested but have told me that the vendors will be waiting until after the open home to view all offers. Is this a smart strategy? The RE agents reckon it gives you a chance to do due diligence and present a clean offer past the open home but of course there is a cost to this as you don't know whether the offer will stand. What sort of tactics have you used to get in before the crowd?

Patty

[Tomo]

Auction? PBN? listed with a price?

Hard to do with confidence if you are new to property but the vendor will look favourably at an unconditional cash offer and also advise your agent you need and answer in short time frame as you have another auction to attend (next day or 2 days away). Make the offer time bound. If the agent perceives you to be a quality buyer they wont want to lose you.

[andyp2010]

^^^^^loving the sunset clauses, had a couple that way

[P.Bateman]

Auction? PBN? listed with a price?

Hard to do with confidence if you are new to property but the vendor will look favourably at an unconditional cash offer and also advise your agent you need and answer in short time frame as you have another auction to attend (next day or 2 days away). Make the offer time bound. If the agent perceives you to be a quality buyer they wont want to lose you.

Currently looking at PBN, have not gone through auction as we spent about $4K on building reports, valuations on our search for a first home through auction so now would prefer PBN.

[df2334]

i think it really depends on the vendors and agents. Some vendors are very stubborn and will only look at offers after the first open home, this usually happens when they have a popular/highly demanded property. Some agents are also reluctant to discuss offers before the 1st open home and they tried to avoid being under cut by the buyers, again usually happen when their listing is highly demanded. There are some agents who are willing to speed up the sales process and are willing to facilitate this prior to the 1st open home. This happens when there are buyers from other agents who express strong interest in this property and are presenting the offer to the vendor directly, so they are afraid of having this sold by another agent, or if they have many listing and they just want to sell it as fast as they can. It's actually a good thing for the buyers if the agent is motivated.


Viewing the property before the first open home is definitely a good strategy, this means you can do your homework earlier and find out more about this property and so that you can make your decision. If the agent is cooperative and is willing to discuss the pre auction offer, then definitely go ahead - provided that you've got your confidence on the price which you r going to offer and you've done your homework thoroughly. Make offer to bring the auction forward or even cancel the auction, in a highly demanded area, this could potentially save your money (or maybe not, who knows, but one thing you don't know is that who will turn up at the auction)

[andyp2010]

The joy of offers is that they MUST be presented (I'm told, I've never gone into the legals), no matter how ridiculous the agent thinks they are.

http://www.damninteresting.com/hyperbolic-discounting/

And that little badboy ^^^^ ensures that your offer will be given thought by a good chunk of vendors, if they understand that your offer is genuinely time-conscious and you're not going to re-offer it after the open home. Or if you will, it'll be at less than the first offer.

[Damap]

In theory this is true however agents are smarter now. They get permission form sellers to bin vulture offers and simply don't present them anymore. To get pre open home or pre auction offers considered they have to be high. So you need to see some thing everybody else is missing about the value. Just the price of being in a hot market.

[andyp2010]

Must be an Auckland thing, even when Chch was burning hot I still got a couple in. I also think its the flip side of having so many PBN's in a rising market, most of your target market of FHB's and the like probably wont know what to offer and switch off altogether.

[Damap]

Oh definitely Auckland thing yes. I bought 2 recently at auction for less than my rejected pre auction offer so you never can tell :-)

[P.Bateman]

Yes talking to some agents today there is an expectation that because the market is still hot (which it is) the vendors want more than what is realistic. Also would like your thoughts on say if the RE agent says that the vendors are looking for mid 500s or over 550K then is it too cheeky to offer $550k as a starting point as you can always negotiate upwards. I've sold a few cars in my time and have always asked for $10k when I'm prepared to take $9k in the expectation that if I had said $9K buyers would offer $8k!!!

[Damap]

Cars a bit different. Most people think agents are experts so if they get told High 5's they think it's set in concrete. I find agents can't help themselves. I had 2 this week try to condition us down pre auction and they were "surprised" when we set reserve at what they said it would sell for.. That's why I only like private sales when buying.

[Frezzinghot]

Am seeing more and more auctions getting passed in, the beauty of this is that the vendor is now a little more motivated to sell.

FH