Pre-auction offers

[Kangaroo_Lover]

Hi guys, got another couple of questions for ya!

1) Any advice on when and how to put in a pre-auction offer? Some say to put it in straight away, others say after 3 weeks, some say after the first open home. Any thoughts and experiences?

2) Agents say I need to send in a 10% cheque with pre-auction offers. I live quite far from the area I'm buying in, so does anyone know if I can email in scanned cheques with my offers?


Thanks heaps in advance!

[Nick G]

Do you want to make an offer that they have to choose between that or going to auction? Is that right?

[Kangaroo_Lover]

Hey Nick,
Nope basically it's going to auction either way, but if they accept my pre-auction offer then it'll be auctioned after 2 days rather than waiting till the original auction date.

Or is that what you already meant?

[smindedf]

If you plan to do it, I think it's best to do it right away.

But I'm very suspicious about this 10%. They shouldn't take your money until you win the auction. Ask a lawyer first if you should send it.

[Nick G]

Ah OK, you want to put in an offer with a sunset clause so they have to accept or decline within a short time frame, say 1-2 days. Maybe do it after the open home. It's a guess really. I wouldn't wait.

I don't know that you need to send in a cheque, maybe ask if you can put the money in your solicitors trust account with instructions that your offer go unco to go to the purchaser? There may be a rule against that but many folks don't have cheque book now....

[lucas]

A pre-auction offer is a conditional offer presented to the purchaser that if accepted, the auction is brought forward to the specified date and the bidding opens at the price agreed.

The conditional element relates to the fact that there is no other bids made on the floor. If another bid is made by any interested party, the conditional element is unfulfilled and thus the pre-action offer is no longer capable of being accepted. In this case, standard practice would be to continue the auction like normal with the standard Auction Sale and Purchase Agreement.

In relation to the 10% deposit being requested; it's not unconditional yet so I would be hesitant about handing over a cheque with the conditional offer. Usually this is paid at the conclusion of the auction.

Hope that helps

[datacraft]

No money changes hands until things go unconditional. Auctions are falling over left right and centre at the moment and I believe agents are only using them because vendors need a wake up call. The market has changed. Fun times ahead. (Based on Information I'm getting from a top agent in Auckland.)

[Davo36]

Why would anyone make a pre auction offer?

I'd rather wait and see what the interest is on the day.

I guess it will only go 1 of 2 ways: 1) There is interest and it sells, 2) It doesn't sell.

In the first case, well you really just need to stump up with the rest if you want it I guess?

And in the second case, then you are in a good position to put in a conditional offer and/or a sharp offer. And you get to see if there were no bids, a few bids or lots of bids. And also gives you some info re the vendor's reserve.

[Kangaroo_Lover]

Auctions are falling over left right and centre at the moment and I believe agents are only using them because vendors need a wake up call. The market has changed.

What does everyone else think about this comment? I do find it very strange that South Auckland is still doing auctions despite the terrible results.

Thanks for the insight Datacraft. Did the "top agent" tell you this?

[Kangaroo_Lover]

Why would anyone make a pre auction offer?

Thanks for the advice Davo. I do mostly agree with you, but my thinking was that I could eliminate some of the competition by bringing the auction date forward. Certain people won't have time to do their due diligence etc.

[datacraft]

Yes. Agents are putting on a brave face and bullsh** vendors about expectations to get listings. That's probably why they are using Auctions. This agent is advising all her clients not to go to auction as buyers are now mostly conditional. She said she's loosing listings to agents talking up sales price only to get them back again when they fall over. One agents opinion however. Good luck.

[Davo36]

Auctions work for agents on the way up and on the way down I reckon.

On the way up everyone's expecting to get lots for their property, so go to auction.

On the way down, they want a quick sale before things get any worse, so they go to auction.

In either case, the agent is able to say things like "Well we brought you the interest from the market."

It's a system designed by agents for agents.

[Davo36]

Thanks for the advice Davo. I do mostly agree with you, but my thinking was that I could eliminate some of the competition by bringing the auction date forward. Certain people won't have time to do their due diligence etc.

Yes, I agree, that would be a good reason to do it actually.

In which case, I'm not sure why the vendor would agree. I guess they'd have to be pretty motivated to sell.

[Lenaaz]

Can anyone please tell me anything about Harcourts auctions? I am looking to purchase a property in the Wellington region, it seems that most Harcourts listings are by auction. Do their auctions follow the same tactic?

[Davo36]

Oh man, with those questions you should not be bidding at auction. Find a family member or someone to help you.