Pouncing before auction… when it’s a good idea

We had one brief recently which had given our interstate buyer her share of heartbreak. We had been under-bidders to one nicely renovated two bedroom apartment in a boutique block in Thornbury and we’d made the difficult decision to walk away from an off market when pending roof repairs were all too hard to cover.

After the second set back, we hit the inspections as aggressively as ever to find the right property.

The criteria was simple, but not that easy. In this fast-paced, moving market we had to be quick to inspect, decisive, and strategic. Our agent relationships, dialogue at the door, and post-inspection conversations with the agents was critical to determine the best path forward for our client’s acquisition.

When I arrived at Peacock St Brunswick West, the block at number 13 was an immediate stand out. Security access, impeccable external presentation, great leafy outlook and good internal spaces were the draw-cards for me. This property was not only in a great locale, but was within budget, tenanted and well kept.

I knew immediately that our client could enjoy an easy transition from settlement to landlord, and following our property manager interview, we knew that the current property management and tenancy arrangement were completely sound.

So what to do?

We chatted directly with the listing agent. He was informative, completely open about the vendor’s preparedness to sell prior to auction for the right price, and encouraging of an early offer. We arranged the contract review and a building inspection promptly, and within 24 hours we had submitted a written offer on a contract for $425,000 with the agent’s guidance. Our comparable sales analysis had indicated to us that market value sat somewhere in the $425K-450K range pending buyer interest.

The most critical element in this situation for us – and in any auction situation – is the agent’s support of our strategy. Had the agent asked us not to submit a prior offer, our tactics would have been completely different. Without agent backing and without a willing vendor, a pre-auction offer can be both dangerous and fruitless.

In the same week that we secured this wonderful apartment for our happy client, we partook in an auction in a nearby suburb which had been tainted by a rejected prior offer. The house had obviously attracted a passionate enough buyer and despite the agent’s requests not to make any prior offers, their $830,000 offer meant that the $780K-$850K price range had been adjusted to $830K-850K.  Not only had the buyer shown their cards, but they demonstrated to the rest of the auction attendees where their offer had been positioned. Consumer Affairs requires all quote ranges to reflect a range which is above any rejected offers.  Needless to say, the property sold on Saturday for $925,000.

Being prepared to move swiftly with a pre-auction offer takes more preparation than contract paperwork.

It relies on a thorough inspection, agent conversations, due diligence, comparable sales analysis, contract review and building inspections. Often our swift moves take other buyers by surprise and in many occasions, we reduce the competing-buyer pool just by bringing forward the battle and inducing an ‘auction before the auction.’

But in all cases, our moves are agent-backed, vendor-supported and realistic.

In this moving market we need to use all of the strength and experience we can muster to have an advantage.