Should I accept a pre-auction offer?

A rising number of Canberra vendors are choosing to accept an offer before auction. In 2016, 11.1 per cent of reported auctions sold prior, this rose to 12.5 per cent in 2017. February has seen auction activity kick back in to gear for 2018, helping to gauge insight in to vendor and buyer sentiment. Not only are a greater number of homes going under the hammer, a higher proportion of vendors continue to accept an offer before auction day, at 13.4 per cent.

From a vendor’s perspective, receiving an offer before auction can often feel as pressured and nerve-wracking as the auction day. The art of separating emotion and negotiation is an essential skill set required for both selling and buying a home. Choosing the right agent is a step in the right direction. It is important to have a trusted professional, one that is across market conditions and has clear and frank communication with their clients. The right agent should help guide your decision when faced with a pre-auction offer.

Vendors are often full of nerves on auction day but the process can feel transparent. It allows all parties to decipher the price position and degree of competition by the number of registered bidders and subsequent competition that unfolds.

It is often a troublesome decision for a vendor when an offer is given before the auction day. It is hard to truly know the competition and level of interest in the property. On several occasions a prospective buyer has viewed the home once (often on auction day) and is the highest bidder. No one can predict when and if this will happen.

Assess the market to understand the true value of your home, having a figure that is in line with market expectation will help to educate and aid any pre-auction offers. By conducting your own research and discussing with your agent you will be able to determine whether the offer is a competitive one.

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Market conditions can sway the decision to accept or reject a pre-auction offer. When the market is performing well vendors are likely to find themselves with several pre-auction bids. By placing an offer beforehand, buyers want to avoid the potential of a highly competitive auction scenario. Canberra’s buoyant market conditions point to the likelihood of a bidding war. Even so, accepting a healthy offer before auction should be considered, particularly if it is above expectation.

When market conditions are subdued, buyer interest is likely to be low. The potential buyer could be deterred from attending the auction if the pre-offer is refused with little to no negotiation. If the home passes in at auction, the interested party will know their purchasing power, particularly if there are no other bids.

In the lead up to auction day your agent will provide the best gauge of buyer sentiment. Irrespective of the market condition success lies in the art of negotiation.