Buying a property prior to auction in the changed market

Although the Sydney market has softened, most properties are still being marketed with an auction campaign.  Sales agents are convinced that this is still the best method of forcing buyers to commit to buying a property, as it sets a sense of urgency and a limited time frame for the sale.

With this changed market many properties are now attracting on average only 1 or 2 serious buyers (whereas during the height of the market boom most properties had 5 or more).  When the reality sets in after a week or 2 of running the auction campaign, vendors are often advised to consider selling prior to auction due to the insufficient competition required to conduct a successful auction.

As buyers agents we are often put in a position of having to advise our clients on how best to respond.  We need to develop a negotiation strategy, including determining an initial offer amount, and how to close the sale with the most favourable price & terms for our clients.

Some of the factors we take into account in this complex process are :

  • What are the most recent comparable sales in the area and how do they compare to this property
  • What is the maximum amount the property is worth in the current market
  • Has our due diligence and investigations uncovered any notable negative issues with the property
  • Have other buyers requested sale contracts, and importantly have any building & pest inspections or strata inspections (for unit purchases) been completed
  • Were many others present at the property inspections, and were the potential buyers there seriously engaging with the sales agent
  • Who are the vendors and what is required for their decision making, and what are their logistics for signing a sale contract
  • Have the vendors purchased another property and therefore need to sell
  • Will a shorter or other settlement period be attractive to the vendor, and possibly result in accepting a lower sales price
  • How experienced is the sales agent & are they busy with their other listings
After these considerations we will then provide advice to our clients, and if satisfied that a good deal is possible, we will negotiate an agreement with the sales agent and then efficiently exchange contracts.  However if the vendor is wanting too high a price and we believe the competition is not strong, we may advise our clients to wait until auction. If the property is passed in or withdrawn, we then move to post auction negotiations.

Similar house sold at auction the following week 

Early Californian bungalow

Single level house in the same street

3 bedrooms, 2 bathrooms, parking

836 square metre level block

Partly renovated

Similar internal floor space but the layout not ideal

Other Properties Negotiated by Homesearch Solutions in late 2018

Two other separate premium properties purchased on behalf of clients prior to auction late last year, with favourable prices & terms are below.

Bondi Beach 

Modern beachfront apartment in a high quality building with a panoramic ocean view and facilities.
Price $7.1 Million.

If you would like assistance in negotiating a property please contact Henry Wilkinson on 0409 105015 or Email Here.