Posted by: pkab | 13 May 2008

Pre-auction Tactics Come in Many Different Shapes and Sizes


Are You Ready ?

We recently had a complaint from a very large real estate agency (we have changed the amounts and location) regarding our behaviour when purchasing a property for a client before auction. He complained that the offer that we gave was too restrictive and put his company under tremendous pressure. It did and it was deliberate. (Sur comments: Handling complex thing is like playing jigsaw puzzle. Use Mind Map to help you in such chaotic condition to have big picture without losing details).

The facts were that this property was tremendously under-quoted. Great corner block, brand new house, 2 off-street car parks. The quote price was $1,200,000 – $1,300,000.

Our client, having bought through us in the area before, knew that what we were saying was correct. The place was valued at $1,500,000 – $1,650,000. Recent sales proved that was the land value.

Rather than wait for the auction, we decided the best tactic was to offer a solid amount before the auction and hope for a keen to sell vendor. The amount was a smidgeon over $1,300,000. When the reply from the agent was positive, we put an offer in.

We deliberately chose an afternoon and confirmed our offer in writing at 3.00pm with a 7.00 pm acceptance deadline. We did this because this is a difficult time for an agent to contact other potential buyers (and there would have been many), who are on their way home from work, picking up kids from school, or preparing dinner etc.
The initial response was that our offer was unacceptable. We asked if this was an agent response or a vendor response and then pushed two points:

  1. We would be withdrawing the offer at 7.00pm; and
  2. We would send the vendor a copy of the offer and state our reasons for withdrawing.

During the next few phone calls from the agent pleading for more time we pointed out:

  1. If it went to auction and got less than our offer, how would the vendor feel towards the agency;
  2. If it went to auction and we were the only bidder, how was the company going to get from the end of the range to our figure without vendor or dummy bidding? And what guarantees were there that we were going to bid at that level?

Visit James Buyer Advocates to know more completely about Agents & Auction Bidding Steps


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