Need Advice on Property Purchase and Auction

Levak on 25/04/2018 - 16:37
Last edited 25/04/2018 - 17:16 by 1 other user

Hi All,
Been a long time follower but first time posting.
I am in the middle of purchasing a property and need your help with a creative yet cheap solution.
The situation basically is a property was listed for auction with a price guide of $650k (it's in Sydney), it is a bit of a rare find because it's really large and has a lot of potential to add value.
I was the only person to turn up to the inspection last week and it's the last weekend inspection before the auction next weekend. Given that plus the fact that the Sydney market is slow, clearance rates are low, I made an offer of 680k. Offer was rejected a day later, agent said sellers wanted 710 - 730k. I went back in with 700k, sellers thought about it but rejected it as they want to go to auction.

  1. Now that he knows sellers rejected 700k, he has kept the price guide at 650k - is that legal? Shouldn't he have to contact all interested parties to revise the guide?
  2. Any suggestions/creative ideas to scare away any potential buyers to go to the auction? A lot of them might go (he said before the inspection I went to there were 70 interested parties who inspected the property, I am aware that another party has purchased the strata report as I went into the strata management company to do a final check of meeting minutes and there was a record of someone else purchasing a report last week for the same unit.

I really want this property and my maximum is $715k (but agent was such a J**k I didn't want to offer that as the seller just said no to my 700k offer no counter offer or anything else.

My hope is I am the only one at auction and who knows.. I might get it for under 700k but I just want to do whatever I can to scare away other buyers (if there's any!).

I am tempted to offer fellow OzBargainers a free lunch if you all can turn up to the auction and make no room for legit buyers to come in HA!…

Any suggestions/recommendations appreciated, auction is this weekend.

Financial Real Estate

Comments

  • Candour on 26/04/2018 - 12:36

    you should check with your consumer affairs dept on the legality of this. even nsw evolves to better practice so we need to be sure that this is not an illegal practice NOW. if no one turns up for inspection the agent has given you info about what the owner 'expects' but he will gazump you at auction if some one comes in. if no bids are made then when the owner bids [ridiculous] you should bid $1 more and insist on the bid being honoured. Tell them the owner's bid is really no bid as no real person actual bid.

    also if you think the agent is stringing you along [he is] then identify the issues and see if nsw consumer affairs will give you advice what to do. I have not found them helpful.
    sorry I did not read all the comments. except the first few.

    auctions are there to play on your emotions.

    if you are firm and do not bid unless the hammer is about to fall you will see real bids coming without bumping up the price.

    all the best.

  • Allan Thomas on 26/04/2018 - 13:00
    +3

    Stop worrying about potential competing bidders at the auction; there's nothing you can do about it and it may not happen.At the auction,DO NOT BID, wait and observe. If and when the auctioneer gets to the "going once, going twice" point and the last bid is below the price that you're willing to pay,then place your bid at say $1000 more,then wait to see if another genuine bid is made. Don't get sucked into bidding against yourself!The auctioneer will say something like "you're buying it" or "it's on the market" once a genuine bid at or over the reserve has been made.Dont be a sucker and help the auctioneer run it up.Buying at auction is a very stressful experience if you're not accustomed to it.If you know someone who's experienced,and I don't mean one or two auctions, I'd recommend asking them to bid for you. Good luck!

    • elgrande on 26/04/2018 - 22:13
      +1

      Allan - best advice of the thread. Can tell you have attended a few auctions.

  • GourmetFoodie on 26/04/2018 - 13:06
    +1

    You know the property is a bargain at 650k and yet you're upset they rejected 700k?

    I used to have your attitude. Spent 3 years house hunting and missed out on SO many amazing properties because I was too tight, meanwhile prices just increased further.

    Yes we might not see the crazy price increases of the past but given the value you see in this property, comparable sales in the area etc ask yourself what it's really worth and then add 10-15% additional buffer for the volatile "emotion factor" of auction day. I'm pretty sure it would be closer to $750k…

    Aussie real estate is actually still cheap given it's the best country in the world to live in. Now the rest of the world has cottoned onto that fact, you just have to suck it up and pay the price to live here.

    • idonotknowwhy on 26/04/2018 - 13:42
      +4

      it's the best country in the world to live in

      lol

    • kingmw on 26/04/2018 - 15:21
      +3

      I would only pay what the property is worth or less otherwise what's the point of coming to ozbargain at all?

      Might as well pay full price or more for all my electronics, vehicles, groceries while I'm at it.

  • prayforchristchurch on 26/04/2018 - 14:17

    Show up to the Auction,

    start your bid high( within striking distance of your budget) increment slowly if needed

    In the west ,there is no bidding frenzy so relax

    Most people come to witness the auction

    I offered $830 for a property pre auction got rejected, bought the property for $815K at auction
    Be prepared to walk away if it goes over your budget/expected price

    • Fever4shakin on 26/04/2018 - 15:04

      I'm surprised that they didn't pass in the auction and 'negotiate' you back up to $830

      • prayforchristchurch on 26/04/2018 - 15:22

        It was a divorce auction, the bidding actually stopped at $805, the negotiation tok the price to $815, i was happy with the price as i was willing to pay $830

      • kingmw on 26/04/2018 - 15:26

        Depends on the reserve, once it is passed then it is on the market so it must sell at the auction.

  • kungfupanda on 26/04/2018 - 14:23

    if the price guide is 650K, it's usually fine if the asking price range goes up within 10% i.e. 650K + 65K = 715K.

    if you have submitted an offer prior to auction and the agent rejected it, my advice is to wait for auction - don't keep raising your offer.

    remember the seller has the right to change the "reserved price" on the auction day - so you don't want to give away too much to the other party.

    if you want to make an offer that is likely to be accepted prior to auction, you need to go at least 20% above the price guide - e.g. >770K
    this way the agent may work a bit harder to negotiate between the seller and yourself.

    good luck!
    i sold my property before auction to someone who offered 20% above the price guide.

  • garetz on 26/04/2018 - 14:55

    You have to be prepared to walk away, otherwise they will know you definately want the property, and they can get you to overpay for it whether you like it or not.

  • Typical16-bitEnjoyer on 26/04/2018 - 15:08
    +1

    Scare away potential bidders?

    Rock up with bikies.

    • blehgg on 27/04/2018 - 10:07
      +1

      Get your friends to rock up and start sniffing the carpet as others walk in.

      • No ONE on 28/04/2018 - 10:17

        What if it’s timber 😂

  • Elnato on 26/04/2018 - 16:58
    +1

    You'll turn up to the auction and it will end at over 800k, most likely

    • kingmw on 26/04/2018 - 17:50
      +1

      Not in the current market.. it is just as likely to pass in.

  • Ace26 on 26/04/2018 - 18:33

    Recently been to an auction, advertised guide was 1.4 and come bidding day bidding day there were 10+ registered bidders.
    Auctioneer opened bids at 1.4, 5 people walked away right away and there was a singled bid at 1.4, eventually there was a vendor bid for 1.5, which the single bidder outbid by 10k yet property was passed in. Later sold for 1.55 to that single bidder.

    Personally I wouldn't want to buy a house in auction and if I did I wouldn't bid unless the house is on market.

    • BartholemewH on 26/04/2018 - 23:29
      +2

      Exactly. The buyer dudded themselves 150k. If it was worth more than 1.4 surely there would be someone to bid against besides the house?

  • snajper on 26/04/2018 - 21:55

    Price guide is usually 10% below reserve price… sales tactics

  • jmal4580 on 26/04/2018 - 22:57
    +1

    Another McGrath Special…

  • TheMindsetTraveller on 26/04/2018 - 23:15
    +1
    1. If you are making an offer with a s66 certificate … then yes, the agent must revise the price guide.
    2. Scare others? Why? You believe you were the "only guy" at the open house PLUS the market is 'slowing' so there is good chance that it will be only you and one other. The market at the moment shows 1 really serious buyer for each property, you might get 1 or 2 more interested parties who are a few % off the first serious buyer.

    What I would do? Go to the auction; make a bid but don't start with $700k. Start it low, say $650k and see where it takes you - IF you were the "only guy" and you bid $650k it will get stuck there, then the vendor may put in his one and only bid (and since they know you 'offered' $700k), they might put in a vendor's bid at that price point and see if you want to go higher. For me, I wouldn't but negotiate afterwards …. say $685K and you might be in luck at that point UNless the vendor is not in a rush to sell and happy to go to market for another week or two.

  • ahly92 on 26/04/2018 - 23:34
    +4

    Can you have a live feed on the auction…would be a fun watch. Anyone else agree?

  • f38r1 on 26/04/2018 - 23:44
    +5

    I want to know the ending, please keep update

  • netsurfer on 27/04/2018 - 00:04
    +2

    OP, I am a potential bidder and to stop me from attending the auction, you need to bribe me. I only accept cash. :)

    • Porker on 27/04/2018 - 11:19
      +1

      I know someone how rocks up to auctions with cold hard cash. He has his friend go up to other bidders and gives them $1000 cash to stop bidding.

      I wouldn't recommend this nor condone it, it's just something that I'm aware of.

  • tryagain on 27/04/2018 - 00:32
    -1

    I know someone who decided to reverse auction once, found two houses he liked somewhat equally, told both the agent's he was going to make an offer on one place at a time and they had 24hrs to accept it or he would pull the offer and offer it to the other seller, if not refused he would up his offer by 10k and start again, bought a house day 3 for a good price.

    • MrBear on 30/04/2018 - 14:18

      This story makes no sense.

      if not refused he would up his offer by 10k and start again

      If his original offer was not refused, why is he adding an extra 10K on?

      • tryagain on 30/04/2018 - 15:06

        if not they refused he would up his offer by 10k and start again.

  • Porker on 27/04/2018 - 11:16
    +2

    I know of auctions that have sold for less than a pre-auction offer - in one case, my friend got the house for $30,000 less than what he offered. He said to the vendor 'you should've accepted my earlier offer', to which the vendor replied 'I never received that offer' (looking at the agent).

    I know of auctions where my richie-rich friends were literally just driving past and decided to stop to view, and ended up buying the property.

    I've bought quite a few properties and the only advice would recommend is 'the perfect house comes once a month'. There's no way to predict an outcome of an auction, so just put your best foot forward and see where it goes. If you miss out, then there's always next month.

  • yellowfever on 27/04/2018 - 11:27

    I have a similar experience and also similar price range you mentioned, although in Melb.
    There are two ways to handle it:
    1. Attend the auction and play out the auction bidding to your maximum budget.
    You will see market value of what the people are willing to buy that property for, including if it doesn't sell. It's not necessary what it's worth, but what the market is willing to pay (or not pay). That's the beauty (or devil) of auctions.
    I wouldn't bother with scare tactics for other potential purchasers. Doesn't matter if there were 50 people or 3 people at open for inspections, you only need one single person to be highly interested and deeper pockets to outbid you and you are out of the game.

    1. Avoid the auction:
      Make your final best offer at least 1 week prior to auction. Verbal phone call and in writing (even if it gets rejected verbally still put the offer in writing) If your pocket is at $715K and you believe that is what you are willing to pay then make this your firm offer, along with any other conditions you want to add to the contract of sale that you would have already read with your solicitor, although an unconditional offer is more attractive to the owner, but always protect yourself.
      Last thing you want is to lose the auction for $720K, when you could have possibly avoided the auction and win it for $715K pre auction.
      Owners are highly likely to consider strong pre auction offers, rather than go to auction. Real estate agents would advise the owner to consider the same. But this is dependent on your offer being strong.
      It's all smart strategy and timing.
      If you make a pre auction offer within 6 days of the auction then you are likely not be considered as it's too close to auction. Likewise if you make a pre offer 2 months before auction it is usually too early.
      If your final best offer gets rejected then you go to auction.

    Finally, yes underquoting is common and Victoria has new laws to prevent this, unsure about NSW. But your aim is to buy property and you can waste time and energy being frustrated with underquoted listings and report them, but this won't achieve what you are in the market for.
    Do research and you will know what the property is worth to you, rather than the agents listed price range.

  • reddwarf on 27/04/2018 - 12:57

    Heya,

    Few pointers from my experience:
    never beat your own bid
    I had to go through a buyer's agent for personal reasons, ended up costing us $330 for excellent service (the price range was $250 - $14000 crazy lol)
    The buyer's agent will have to fill a form claiming who he represents so you can't really hide behind them.
    These agents might also give you some free hints during initial contact (how much the owner expects , worthwhile putting an offer beforehand)

    In our case, the agent estimated the owners to be greedy (she was right) and convinced us not to put an offer.
    It is too late for that in your case as you have now showed your hand.
    They will use your offer as a reference / reserve++

    On auction day, 80% of the attendees are useless as they are either friends of bidders, friends of agent or opportunistic sharks in for a bargain.
    It will usually end up with 2 - 3 people at the end. The auctioneer represents the owner and will use tactics to stall the auction - giving time for pressure to push people who fell in love with the property to their highest bid.

    I've tried to attend all inspections yet never noticed the couple we were facing against on auction day so don't get too confident..

    Be firm,
    answer fast,
    remember you can bid in any increment (we won by 20 consecutive increments of $100)
    know your walk away limit
    don't bid on top of yourself
    don't be afraid to let the auction fail

    • serpserpserp on 27/04/2018 - 19:37

      Imagine if you have just bid in 1k increments, you might have scared them off with 1 bid. Little $100 bids just gets you stretched out even further. Always bid confidently in large increments up to your limit.

      • reddwarf on 27/04/2018 - 22:58
        +1

        That was my novel idea after the underbidder suddenly bid 25k and have taken the lead. I called it a bluff and their highest bid.. they probably had 1k last-resort-buffer and my $100 increments managed to drain it.

        • serpserpserp on 28/04/2018 - 09:38
          +1

          But if you just bidded 1k they would have been out, saving you 1k.

          I'm just not a fan of tiny bids. I think it gives other bidders too much thinking time and they believe a win is just around the corner so tip a little more in, probably even beyond their limit.

          It is a great strategy for the vendor though, extracts every last dollar out of the auction!

  • c0balt on 27/04/2018 - 13:00

    Had the same happen to me twice, then at one of the auctions I was the highest bidder (bid ended up being the same as my offer) and it got passed in.

    Later that day the seller asked me for an extra few thousand for it to be mine, and I said no.

    Had he accepted my first offer I'd have a worse place than I do now, and paid more for it in the same area and the seller would have got just enough extra cash out of me to cover the extra agents expenses (no doubt).

    So as bad as it is to waste all that time (under-quoting is dodgy, but I can understand why sellers choose to instruct their agents to do it), there's always something better coming your way if you want to put the effort find it and are willing to wait.

  • renw on 27/04/2018 - 14:52
    +1

    Put yourself in the sellers shoes, they've paid for an auction campaign, gone through the stress of open homes, a lengthy campaign and potentially poor feedback from the agent if no one rocks up to open homes.

    Then they get an offer of 700k. Their agent will say no one offers there maximum. There could also be other bidders looking for a bargain.

    After a campaign, you would not succumb to an offer that is most likely not the highest someone will pay. You'd plow on hoping for bigger and better things. So I don't think there's much you can do except wait for it to pass in, then hope you get it for around what you want to pay.

    Some else mentioned overpaying 10k to get your property. I agree, only if the total is under a well thought out and planned max. In that case overpaying 10k means you get a house that you can afford, and benefits you in the long run as it strengthens your area.

    My 2 cents anyway! Good luck! Hope you get the house you're looking for.

  • serpserpserp on 27/04/2018 - 19:35

    What you should have done is offered your highest amount (715k) I mean you want the property right? Is it still cheap at 715k? If it is, put your best foot forward immediately son. If you get turned down, least you don't waste your time at the auction.

  • kingmw on 28/04/2018 - 22:55

    Updates? Auction outcome?

  • Kiz on 29/04/2018 - 20:07

    What was the result?

  • geoffs87 on 30/04/2018 - 10:02
    +2

    How'd it go boss?

    I'm assuming he either:
    a) didn't buy it
    b) paid over his budget

    There was only 2 properties that sold in the 7-720k mark on the weekend, and neither really match his description.

    Theres a couple which i assume the places might be (towards the west, really large with potential to add value), and they sold around the 750k mark…

    SPILL THE BEANS!

  • icejester on 07/05/2018 - 01:13

    Just bid at the auction
    Go through the ropes of bidding, it will be useful experience later on in life

    There's nothing you can do to stop other buyers
    Just bid in small increments until you reach your max price

    Thats it
    Nothing more to it
    Don't over think it, there's thousands of properties for sale in Sydney

  • richmond12 on 13/02/2019 - 11:57

    Sad that there was no conclusion to this thread. Thats the least you can do OP

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