Buying a home
Making an offer on a property pre-auction
14 July 2022
Auctions can be a thrilling way to score your dream home, but they have downsides. Competition with other keen homebuyers can cause emotions to run high, and when the pressure’s on, even rock solid budgets can fall apart.
But did you know you can make an offer pre-auction? Luke Moroney, a buyer’s advocate from Search Party Property, provides some expert tips on buying property before auction day.
Pre-auction offer basics: get to know the market
A pre-auction offer is a private offer on a property scheduled for auction. Before even considering jumping in with an offer, your first step should be to learn what the property is really worth. Studying the market can give you confidence when negotiating as it shows the seller you know your stuff.
Luke suggests being specific about areas you’re keen on when it comes to pricing so you’re always comparing apples with apples.
“It's about being very defined about the streets you want to live in. If you're a new buyer, really gauge one, two, or three preferred suburbs, and target streets in those suburbs.”
Dropping into auctions and open homes can fill in a lot of gaps – and don’t be afraid to ask questions.
“Attend open homes and talk to agents. Ask what's happening in the market and get their opinion on specific houses for sale."
Learn as much as you can from the vendor’s real estate agent
There’s no need to beat around the bush when you’re talking to the seller’s agent. A good place to start is by asking if the sellers are accepting offers prior to auction.
“You can find out if the sellers are just assessing the market. Even if the agent says they’re not interested in taking offers, wait a week and then ask again.”
Talking to agents is also a great way to compare asking prices versus final auction prices.
“Ask them to show you some sales comparable to the property you’re looking at.”
And if a home’s caught your eye, Luke says there’s no harm in asking outright what figure could tempt the sellers.
“All it takes is for you to say: ‘how much will it take to take it off the market?’”
After working out how much to offer, be sure you’re ready to back it up
Organising home loan pre-approval means a lender has agreed in principle to lend you a certain amount.
It’s not mandatory, but getting pre-approval can be an ace up your sleeve during pre-auction negotiations.
“The speed of the transaction can be very important for a pre-auction offer. It can show you’re ready to dive in straightaway,” Luke says.
Pre-approval can give you a confidence boost when negotiating because it shows a seller you’re serious. It’s also a great way to keep your budget in check during the house-hunting process.
Take flaws of the property into consideration
Attractive properties in good locations encourage healthy competition on auction day. Rather than push your budget to the limit, Luke suggests looking into less popular properties that can provide wiggle room during negotiations.
“Consider a property with four bedrooms and one bath, as opposed to the same property with two baths. More people will want two bathrooms, so you might have more room to negotiate.”
But even houses that look the part might not give you the full story. Luke says making a pre-auction offer on a property sight unseen, whether due to impatience or excitement, can be costly.
“A lot of people go to auction and don't get a building and pest inspection. That’s obviously risky because of the potential for structural problems or termite damage. There could be some big issues in the long term.”
Be ready to walk away
Making an offer on your dream home is exciting – and you should absolutely enjoy the moment! But it’s important not to emotionally commit to a home before negotiations begin. Instead, remember your research and stay calm, balanced and rational.
“It’s very difficult to have an open mind when you’ve found your perfect home,” Luke says. “But you should be ready to walk away if you can’t come to an agreement.”
If you’re not confident tackling negotiations, or aren’t sure if you can leave your feelings at the door, a buyer's avocate can help manage a lot of the complexity – and minimise the stress – that can come with pre-auction offers.
“Get a team of people around you, and use a buyer's advocate if you can. You’ll find it’s faster and you'll probably get a better price,” Luke says.
Prepare yourself with home loan pre-approval
To come to the negotiation table prepared, don’t wait to organise your home loan pre-approval. A Suncorp Bank lending expert can help answer your questions and help with your home loan application. And just like the pre-approval itself, all consultations with Suncorp Bank lending experts are 100% obligation-free.
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The information is intended to be of a general nature only and any advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.