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We all know the Sydney and Melbourne housing markets are hot, with the majority of properties going to auction. Every weekend we seem to be reading about another ‘super’ Saturday!
In a hot market, it’s tough to secure a property prior to auction, the agents know there will be multiple parties bidding running high with emotion. This emotion and frenzied FOMO usually leads to higher than usual prices being paid for the property.
To secure a property prior to auction in a hot market you need to have a strong offer, a really compelling reason for the seller to accept and withdraw the property from the market.
Tips for securing a property prior to auction:
1. Know the market intimately, including the most recent comparable sales to ascertain what a fair price is for the property. The price has to be strong enough for the owner to accept, this usually means offering above what is considered a fair price. No point low balling here.
2. Understand the vendor's motives for selling and what their ideal settlement terms are. This will help you frame your offer.
3. Make the offer under auction conditions i.e. no cooling off period. This means you do not have the option to undertake pest, building and strata reports or a bank valuation - post your offer. So it goes without saying, we ensure we complete these checks prior on behalf of our clients. If the reports come back with any issues and/or your bank won’t secure financing on the property and you don’t proceed - you will lose your deposit. In most cases, this is 10% of the agreed purchase price stated on the contract.
Your mortgagee will value the property to ensure they agree with your offer. If the valuation comes in lower than the agreed purchase price you will have to make up the difference. Another reason it’s important to have the valuation undertaken prior to making an offer.
4. Make the offer in writing on the front page of the contract and ensure it is signed. Include the comparable sales in the area to support your offer.
5. Ensure you have always discussed making an offer under auction conditions with your solicitor/conveyancer and lending institution first. In NSW, your solicitor/conveyancer will issue a 66W certificate that accompanies the offer. This waivers all conditions.
In a soft market, the buyers are in the driver's seat and vendors will be open to accepting your conditions. Contrary in a seller's market, however, the above method is your best chance to secure the property prior to an auction.
Milk Chocolate was founded seven years ago by Richie Ragel and Michael Cleary, to purchase residential and commercial property in Australia on behalf of our clients, looking for a home or investment property. To see how we can help you get in touch here.
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