Property Hub - Investment Insights & Inspiration - Realty Talk: Negotiation BEFORE auction day

Episode Date: January 7, 2023

If you are serious about buying a property at auction, there are ways you can secure the property before auction day but is it a good idea and is it worthwhile?  Cate Bakos is a buyers agent based in Melbourne.  Cate shares the pros and cons of making an offer in the lead up to an auction. RealtyTalk is part of the Property Hub podcast channel, your home for property investment insights, inspiration, and stories from Australia’s top property experts, investors, leaders, and analysts. Subscribe now to get every RealtyTalk episode delivered to you each week for free, and also get full access to Get Invested, the leading podcast for Australians who want to unlock their full ‘self, health, and wealth’ potential and get inspired by the stories of investors, founders, and entrepreneurs. Subscribe to RealtyTalk on the Property Hub channel: Apple Podcasts | Spotify | Google Podcasts | Email Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media. Business and partnership enquiries: [e-mail] omnystudio.com/listener for privacy information.

Welcome to Realty Talk, the show that brings together the country's most authoritative and respected property experts. Follow us on all the socials and subscribe for updates and exclusive offers. Realty Talk is powered by Realty.com.au, connecting buyers, sellers and agents differently. Hello and welcome to another one in our summer series of auction updates for CoreLogic. Kate Bacos is joining us in this wonderful series and we've covered a lot of territory. today we're going to cover the the part that a lot of people neglect and that is negotiating before the auction yes you can negotiate before the auction you can actually purchase a property but is it the smartest thing to do

Kate Bacos is a buyer's agent she works out of the Melbourne market and she has to face these dilemmas every week every day in fact Kate how are you every single day. Kate, let's talk about this. Let's talk about negotiating. And we all know that we covered this last week in the show where you can negotiate a lesser deposit, you can negotiate a longer settlement term or a shorter settlement term. But what about buying the property on your terms prior to auction? Is that going to be possible or are we going to have to be prepared to pay a premium price to stop the auction? Great question. And the critical thing here is that every auction campaign is so very unique. And so in some circumstances, it's a great idea. And in

others, it's terrible. And then you've got the few auctions that can't be bought prior. And the biggest mistake that buyers face or make is that they assume that if the price is right, or if the price is in excess of the quoted range, that they can step forward with an offer and try and bully vendor and the agent into selling it to them and it doesn't work that way so in some cases an option has to has to run to auction day that might be a mortgage sale or a divorce settlement where it's a court order and there's a few other quirks that will determine that the option has to run in other circumstances though the auction might be going the campaign might be going really well in which case the agent might not want to bring it to a head prior because there's a lot on offer

for a good agent if they host a fantastic auction and everyone's there seeing them do their craft and they get a record price that's some of the best publicity they could ever ever organize for themselves so you've got that facet where the agent might want to have their day in the sun you've then also got vendors that are quite excited by the idea of auction and believe it or not there are some out there most are terrified of it and they're quite apprehensive but you do get a few vendors that have made that decision they're running to auction day so trying to get get the agent to enable you to purchase it prior is a mistake when you're trying to force something that is going to be very hard to force and then in some cases where the agent says to you well

you know if the offer's strong enough to to blow their socks off i'll sell it prior you've got to ask yourself if you really want to be the buyer that blows someone's socks off because it's not how i want to do business so working out what is the advantage in putting an offer forward is the critical question and if I think that I can move forward with an offer when other buyers aren't quite ready and typically it's finance that gets in the way for other buyers if I think that I can pull things to a head and buy a property for a fair price and knock out the buyers that might have challenged me on auction day because they're not ready that's one good reason to buy prior and if I also think that by putting my offer forward I'm in control of the negotiation process

in the face of competition that's another good reason to do it because what you don't want to do is trigger a sale and then have the agent say to everyone you've got one chance and one chance only to submit your best and highest because then you've lost your opportunity to fight for the property you've got to pay some mystical price you might pick someone by a hundred dollars but they might pick you by a hundred dollars or you could pick them by fifty thousand dollars and it never rests comfortably with buyers when they're flying blind in a scenario like that. Yeah, there's a danger for both sides, both the seller and the buyer, in showing their hand before the auction. One, for the buyer, you're indicating to the seller and to the agent probably what your

price is. And not many agents will let their sellers come back and make a counter offer unless they're very close because they don't really want to give any indication out about what the reserve is so it really is a dangerous area to work in kate and i think people can get very easily upset because they don't understand fully what the process is yeah i often say to buyers don't start something that you might not be able to finish you've got to understand what you're walking into and how to navigate this and it gives way to another reason why we would support putting in an offer prior to auction when the circumstances are right and that is if a buyer has their heart set on two properties and the property that they prefer goes second because if they wait for that

property they've lost their plan b opportunity so if we can switch plan a and plan b to give them two bites at the cherry that that can be an opportunistic way to help someone buy when they're under time pressure or the two properties that they've set their sights on a really high scorers for them the other risk too in making an offer prior to auction is that and as you've already identified you're opening it up for the agent to go back to any other interested party and say look there is another offer on the table this is your your opportunity to put your best and final offer forward you may find out that you're in some sort of a dutch auction which is worse than being in an auction on the floor because at least on the floor you can see who

the bidders are. Yeah, it's transparent. You'll never really know in those closed envelope situations whether you're the only bidder. And it's a dangerous place to be if you haven't done your homework. Yeah, indeed. Always great advice. Kate Bacos is a buyer's agent out of Melbourne. This is the Auction Update Summer Series brought to you by CoreLogic. Kate will be back again with us, thank goodness, next week to give us another wonderful insight. Kate, thanks for your time. thank you for having me kevin miss something in this week's show or want to catch up on past shows do it anytime at realty.com.au where we connect buyers sellers and agents differently