Making a Pre-Market Offer on Property

Hoju on 23/03/2018 - 22:14
Last edited 24/03/2018 - 07:23

Looking to pick the brains of the learned crowd here.

We were called by an agent a few days ago who has been in touch with us over several years, valuing our own apartment but also seeing us at multiple open homes. He called and said he thought he might have something coming to market that we would be interested in, and mentioned a ballpark price that seemed very appealing to us. Would we be interested in a pre-market purchase?…

He gave us the address and we said we would do a walk by and get back to him. Having walked past and seen photos of the property last time it was for sale via a google search, the place looks like the kind we’ve been searching for for ages. I called him back and said that we would absolutely be interested at the price he mentioned, and would likely make a formal offer of that amount pending inspection.

At this point he started using a price $100,000 more as his ballpark. And said he wouldn’t be able to show us around for 10 days as it was tenanted, but could show us around when they were taking photos.

This was starting to sound like typical real estate agent games - upping the price, adding time to rally up more interest, and why take photos if we were happy to make an offer premarket?

The upshot is that we are very keen, and want to know if we can make an offer based on his phone call, that he is legally obliged to present to the owner? My wife is under the impression that all written offers have to be presented though I’m not sure where she got this from (we are in NSW).

Also what are our obligations surrounding the offer? I’ve spoken to our bank but any finance is yet to be confirmed, as the value of our current unit that we would sell is uncertain. Can I make an offer that is subject to inspection and financing?

TLDR

Interested in making an offer on a property pre market, what is the best way to do this?
Edit: property is best match we have seen in years of looking, apparently within our price range but the goalposts are changing with the agent and keen to stop the games, if that's what's going on

Home & Garden

Comments

  • ihbh on 23/03/2018 - 22:30
    +4

    Slow down mate. What do you reckon is the market price? Around $100k more? If so, it's unlikely your premarket offer is going to get much traction. If anything, the owner will likely seek more offers.

    No obligations on either party until contracts exchanged. So hold your horses.

    You can make your offer subject to anything. If someone else comes and exchanges contracts, while you're, say, doing a pest and building inspection, then it's bad luck for you.

    • Hoju on 23/03/2018 - 22:38

      Thanks for the advice regarding making an offer.
      The market value is hard to gauge. It’s not an appealing property in a lot of ways but fits our requirements almost perfectly.

      I honestly feel the agent is playing games.
      They initially said the owner was happy to follow their recommendation on pricing and mentioned their first ballpark figure. This figure later increased.

      Good to know we can make an offer though without being tied to it. I would just rather it didn’t go to auction, that whole process is just not something I’d ever want to get into, I get palpitations just bidding on ebay

  • retiredfeline on 23/03/2018 - 22:33

    The upshot is that we are very keen, and want to know if we can make an offer based on his phone call, that he is legally obliged to present to the owner?

    Yeah so what? The owner can just ignore your offer.

    • Hoju on 23/03/2018 - 22:40

      They were originally presented by the agent as individuals that weren’t that interested in going to market and happy with x Sum. The agent however might have other ideas and I was just not keen for them to run the show

      • retiredfeline on 23/03/2018 - 22:58
        +1

        I think you're just getting your hopes up based on banter. The owner might have changed their mind and realised they can get more.

        • Hoju on 24/03/2018 - 06:48

          Absolutely, that’s half the reason for the post - we got our hopes up based on what the agent said to us. Which seems reasonable, but the changing story within a day is a red flag for us

  • mskeggs on 23/03/2018 - 23:32
    +2

    So the market is really sketchy at the moment. Core logic says Sydney is down 28 or the last 29 weeks. The heat is gone, relax, if you don't have to transact in the next month you can be cool and see what happens.

    My advice is always if you see a place you are romantically in love with, because you can't see it as an investment or place you could rent out - buy it!
    But don't buy places you love because they just offer better value than other places. Look for genuine absolute value, or real romantic love - nothing else.

    • Hoju on 24/03/2018 - 07:13

      Thanks for this - it's really just as you say. We've been looking for this kind of match for about 5 years (we live on a small suburb with tightly held properties and it's somewhere we'd like to see our kids grow up).

      I have no idea of the actual value really because as you say the market is in an uncertain phase.
      It's probably in the region of his $100k upper range, possibly more.
      But the romantic value is high

      • [Deactivated] on 24/03/2018 - 11:23
        +8

        Never provide numbers or take numbers if the agent isn't ready to tender your offer. It never works in your favour.

        You did a walk by when the agent made a "ballpark offer" aka tempter. They use that gauge your interest and in this case, there is interest. They go back to their client, the vendor, and boasts that they already have interested parties and they've been walking around the house.

        Vendor's ears prick up. Human greed takes over. Vendor may have genuinely be happy with $X, but here is an extra $100,000 (ex commission and duties) and all he has to do is let the agent play their game. Vendor isn't bulletproof at this point but he believes he is.

        You start thinking emotionally. You've used terms like romantic value, tightly held property, 3 years of looking… You're right where the agent wants you to be, where you believe there is an urgency. You believe that if this oppurtunity is lost, there will be an emtional pain.

        Although I've never been a salesman, I've read enough books about salesmanship and enough YouTube videos of hard pushing salesmen exposing the trade. In the snippet you've presented thus far, your agent has clearly played a few moves and it has clearly taken the intended effect.

        The best thing you can do now is play in reverse. Stop being receptive to phone calls, and when you do, don't allow him to steer the conversation. If he starts with smalltalk, smalltalk him out and end the call. Don't let him know you're on to him, do not provide any form of closure that you're annoyed or upset. Wait for him to be forward, which is his poorest angle of attack, and make your offer on paper. Ask for the vendor to be informed of the offer and make sure you show him that you have a copy for reference.

        Chances are, the agent is no longer going to be as cordial with you, but he was only cordial because wants your business and he wants it his way.

        • Seraphin7 on 26/03/2018 - 10:47

          Well done. Very wise advice.

  • SPCTRE on 23/03/2018 - 23:40

    If you know the agent is taking you for a ride, why bother continuing dealing with them.
    Unless you want to pay the extra 100k, get over it and move on.
    Probably find something better anyways.
    It’s no use complaining about it on here trying to get advice about how to make them honour a verbal conversation.

  • trustnoone on 24/03/2018 - 00:20

    Any feedback on the agent? Like online, how does he feel? From what you've written above, I'd be pretty iffy as well, is this Sydney? I feel it makes quite a difference. I've never bought a house but I move around a lot (I use 6 month leases because I have commitment issues XD). But almost every agent I've seen has never been straight up or have put money over both the owner or a tenant (Some are great though).

    I've been lucky that I've never failed to pay on time, and I've never had any issues with an agent. But I've seen a quite a few thats done something unscrupulous. I'm not saying something is wrong here, but I am saying that I agree that it seems like you feel everything isn't on the level. I wouldn't be surprised at all to see the price rise more, or if you're being used as a secret auction person, where they up the price to you, then go to some other guy and up the price to him, then come back to you to up more until they get the max from either of you all.

    • Hoju on 24/03/2018 - 07:22

      Yeh Sydney, a fairly small suburb that he specialises in so we see him a lot and have always felt he's a bit too slick - I've always said I'd like him working for me as a vendor but not as a buyer, and now it seems that might be happening. Just not a fan of games / changing stories.

  • garetz on 24/03/2018 - 00:44

    They want you to make an offer, so they can shop it around, dont fall for it.

    • Hoju on 24/03/2018 - 07:17

      That was our concern - playing games is not my thing, I want straight up.

  • alz on 24/03/2018 - 07:08

    How about you call the agent and say ''Hey I'd like to make an offer'' and see what happens?

    • Hoju on 24/03/2018 - 07:10

      Might actually do that! as above though, tricky situation - given his changing stories I wonder if the strategy is as above and he's basically conducting a silent auction behind the scenes.

      • alz on 24/03/2018 - 07:12

        I wouldn't obsess over it. Call as soon as they open. You'll know by the end of the day :)

  • chumlee on 24/03/2018 - 07:23
    +1

    You want to make an offer before it's even open for inspection?

    Agent will tell the sellers already strong demand and we should wait for even more offers.

    • Hoju on 24/03/2018 - 07:27

      Yeh that's kind of the problem - it's basically the best match for us we've seen in at least 3 years of looking, so we would like to get in early
      Puts you in a tricky position as a buyer because seeming too keen could cost big $$

      • chumlee on 24/03/2018 - 08:26
        +2

        Are you sure he even has the listing anc not Just trying to create a buyer so he can approach the owner?

      • KaTst3R on 24/03/2018 - 11:54
        +3

        Be patient. By you putting in an offer now doesnt help your situation. In fact if any, it shows there is a demand for that place and owner will have more ideas about jacking up the price. Just tell the agent to let you know when the place is open for inspection then we'll talk. You need to keep it cool even though you are really excited. If it is meant to be, it will be yours, just like your wife!

  • barbarella on 24/03/2018 - 08:10
    +2

    The agent is playing games…getting you interested by just casually mentioning a low price…and then telling the owners that he has interested buyers…its just the way they get people to buy and sell so that they get the commission…if it sounds too good to be true, then it is.

  • Itburns on 24/03/2018 - 08:17
    +3

    Don't bother proceeding now. You've shown real interest, now the agent will talk the owner up saying there is tons of interest even before it goes on the market. If it is going to auction, let it happen & then bid to your max on the day. If it is a private sale, put in a low-end offer & ask to be kept informed of any further offers. Very, very rare to get a bargain in Sydney real estate!!

  • onetwothreefour on 24/03/2018 - 09:04

    Don't trust any real estate agent, their number 1 goal is to sell tbe property for the highest amount they can get.

    • Oofy Doofy on 24/03/2018 - 12:50

      Don't even trust them as a vendor and going to Auction, you'll have a conversation that dances around a lower reserve price they think you should make it, so it legally has to be sold once a bid goes over that amount.

      I always tell people I know to put a high number as their reserve property auction. You can always tell the RE agent/auctioneer that 'the owner has said it is on the market now'.

  • GourmetFoodie on 24/03/2018 - 13:43
    +1

    You cannot get a bargain in this market. I don't care if they say Sydney prices are falling. Not in the places where people actually want to live or in the price range most people would be buying into! You have allowed yourself to get emotional because the agent tempted you into thinking you could get a bargain.

    Step back, cool down. You need to get your cards in order. Go to the bank and find out your maximum borrowing amount. Either sell your unit or get a realistic valuation done on it.

    Once you have this info, you will be in a position to negotiate.

    Off market sale is unrealistic. You will not have a hope in hell unless clearance rates fall below 50%.

    Prepare yourself for an auction and steel yourself emotionally. Temper your obvious interest to the agent so he's less certain you are ready to participate in his game.

    • Hoju on 24/03/2018 - 14:46

      Good advice although we’re not expecting a bargain, just thinking along the lines of the agents own estimates of what he and the owner want.

      Pre market sales actually happen quite often in our area, although I have no idea what sort of money is getting exchanged with these.

  • Seraphin7 on 24/03/2018 - 14:14

    One observation I'd make is that you seemed "very keen" when talking to the agent. Has this been taken as a sign that you'd be willing to part with more than the first price to purchase the property?

    At the end of the day though, talk (on both sides) is cheap. Until the agent provides a contract for sale and you make a formal offer, it's all just chat.

    • Hoju on 24/03/2018 - 14:51

      Certainly very keen but within the confines of the agents specific price mentioned, and specified many times that our interest is based on his price quoted

      Who knows how that plays out in his mind…

      • barbarella on 24/03/2018 - 18:52

        He's got you hooked…and you are now so keen you wouldn't mind paying just a tad more????

        • Hoju on 24/03/2018 - 19:03

          no The interest was based on his quoted range.
          We would be hooked regardless. It’s the ideal property for us. How we put ourselves in the best position to own it within the confines of our funds is the question.

  • Meho2026 on 25/03/2018 - 07:31
    +1

    The agent is always working for the seller and motivated by their commission. If hes good and as you say slick at his job then keep him in mind for when you sell. Always take what an agent says with a grain of salt and check things out yourself.
    However dont assume that the agent is always trying to scam you, you say your suburb is small with tightly held properties. If thats the case its always prudent to establish a good relationship with any agent in the area.
    If this agent has got to know you, you have a good rapport, they believe you are a serious buyer with everything in place to purchase with a knowledge of current property values in the area then it could just be a mutually beneficial opportunity.
    I bought a property once like this when the market was booming, a sale fell through and the agent basically told me I can buy it for the original price, we both knew it was quite possible more could be achieved by putting it back on the market but the seller just wanted the deal done, the agent didnt want the hassle and knew I was ready to jump on a deal.
    If the agent you are dealing with finds a buyer (you) before the place has hit the market, saving the seller time, advertising and/or auction costs, the agent gets his commission for little effort as he only shows the property to you, no open homes, fielding inquiries etc. The seller is happy with a quick sale, they may even need a quick sale. You purchase the property for a fair price, everyone wins.
    If you are really serious about buying you should really already be organised with the bank.
    My advice would be, get your borrowing approved by the bank ASAP. Communicate clearly with the agent, go back and remind him the first time you spoke he mentioned X price and tell him you are interested at that price but the next time you spoke he increased that which you found off putting. You dont need to elaborate on why that was. Then reinforce to him that you are a serious buyer, your finances are in place and you are ready to buy for a fair price. Leave it at that, if not this property there will be another.

    • Hoju on 25/03/2018 - 08:36

      Thanks for the experience - I think the communication regarding the change in price is appropriate, and a good idea. Expecting clear communication from him means the same is probably required from my end.

  • justhooked on 26/03/2018 - 11:16
    +1

    Do your homework google your area for recent sale prices even ones that have sold pre market will show up.
    We had the same with a block of land agent knew we were looking via interest in another that sold .
    Told us a price of the block once we were interested price went up we did our area homework and had a better idea
    From what they paid and others sold for . Put in an offer well under is original price and said this was a one time offer with a 72 hour valid clause As we wanted to put in an offer on another block and got it . Play the game like they do !!!

  • [Deactivated] on 28/03/2018 - 22:00

    Sounds like the real estate agent was feeling out the market and when you seemed very interested he decided his valuation was too low.

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