Many sellers believe that when they list their home for sale by auction, they’ll be waiting for the hammer to go down at the end of an extensive marketing campaign to sell their home. However, in recent times, close to half of all homes in Rozelle, Balmain and the surrounding suburbs that have been listed for auction have sold before the auction date.
Knowing how to deal with offers made before an auction can make a huge difference in the overall success of your property sale so it’s important to work with a real estate agent who knows what they’re doing.
When to start considering offers
Even though you’ve listed your Inner West property to sell at auction, the auction campaign will run over a four-week period and quite often you’ll receive bids before the auction date. Depending on the offer, it might be in your interest to sell before auction ‒ and the auction date itself will often create a deadline and pressure for buyers to act early.
Probably the most important thing about an offer is your own ability to assess the offer confidently and make an informed decision. If the house has only been on the market for a day or two, although we’ll have a rough idea of what we expect it to sell for at auction, you might not have had enough feedback from the market to feel confident accepting or declining the offer. A bid too early can be hard to navigate.
Generally, it’s around the third week of a campaign when things start getting serious as keen buyers will have had a chance to make themselves known and complete their due diligence. If your agent is doing their job, they would have given you great feedback from the market and an honest assessment of how things are looking leading up to the auction.
My average selling time is around 24 days, which I feel is about the right time to be on the market. Much shorter than that could lead to you wonder how much money was left on the table. If it’s much longer than 24 days, it leads to buyers discounting the property and wondering why nobody else has snapped it up.
It’s about more than money
Of course, the primary factor when considering an offer will be the price, but it’s important to properly qualify the buyers who are making the offers and what (if any) other terms are attached to the offer. A verbal offer from somebody who isn’t in a position to exchange contracts is merely hypothetical; these offers can give you a false indication of value as well as being a dangerous distraction from where true value lies. These ‘offers’ are really just feedback and whilst still important the focus should be on working with buyers who are ready to proceed and commit unconditionally to the purchase.
We won’t encourage you to even consider an offer unless it’s from a buyer who’s done all of their due diligence, their solicitor is ready to go, they’re happy with the contract and the building inspection, and they’re fully finance approved. In this case, they can literally exchange contracts (and you can have all the i’s dotted and t’s crossed) within hours.
As an agent, it’s my job to qualify the buyers. If someone asks if a seller is willing to consider an offer before auction, I’ll give them direction on price. I’ll also discuss the offer process and let them know what they need to do upfront to ensure that their offer is one that the owner will seriously consider.
How to make sure you’ve got the highest price
At any given time, your agent should know which buyers hold an active ongoing interest in your property and who needs to be kept informed if the property is going to be sold.
If you receive an offer that’s above the level of interest from other buyers (or there’s nobody else interested), the normal course of action is to make a counter-offer. This becomes a one-to-one negotiation to make sure that you obtain the highest price that the buyer is willing to pay.
When you have more than one person willing to make offers, you can engage in a competitive offer process where you go back and forth between your bidders to see who will come out on top. In many cases, this is a lot like the auction process, where the person who is prepared to make the highest offer will get the property, as long as you’re happy with the price.
Often, people will make an offer prior to auction because they want to negotiate directly with you and avoid the competition of the auction process.
I explain that if they make a pre-auction offer and it’s at a level the owners would entertain, then I’d be obliged to contact all other buyers and give them an opportunity to make offers, which can lead to a competitive offer process. For some people, that can be enough to put them off and they’ll wait until the auction to show their interest.
Selling prior to auction is as much about guiding the buyer through the process as it is guiding the seller. Depending on your property, your personal situation and the feedback that’s coming in through the marketing campaign, we’ll know how to bring both sides of the transaction together confidently, and achieve the best outcome in a fair and transparent manner.