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If you have found a property that you wish to purchase and it is available for sale by auction you may wish to attempt to secure the property prior to the auction. There may be several advantages of purchasing the property in this way.
Having to wait until auction day for the property you love can be a nerve-wracking experience and the prospect of other buyers coming to see the property may increase the chances of competition heating up between bidders on auction day.
It is this very competition that you must remember the vendor is hoping to attract on auction day so it's important to try to see things from the vendors perspective if you wish to have a chance at securing the property prior to auction.
All properties advertised for sale by auction have a price guide or an estimated selling price which should be seen as an indication of the price at which the vendor is willing to sell the property or the value which the estate agent has estimated a buyer will pay. This however does not necessarily mean the vendor will accept this price prior to a scheduled auction. The vendor may reserve their right to proceed to auction without considering offers. The reason for this is that the vendor is naturally going to be hopeful of competition escalating the price on auction day. So therefore if you wish to have a chance for your offer to be accepted prior to auction you may need make a very attractive offer in order to tempt the vendor to sell it to you and exclude any possible competition that may have otherwise developed on the day of auction.
Whilst there are some vendors who would not accept an offer prior to auction under any circumstances and this may well be their express instructions to their agent, most vendors would change their mind on this tactic should an outstanding offer be made prior to auction day. It's important to understand that very few vendors will want to sell their property prior to the auction for an ordinary price. If the vendor is unwilling to sell prior to auction, you can learn 'how to win at auction' on this link.
You may decide that paying a price that might seem a little bit higher that expected is worth more to you than the stress of having to wait and the uncertainty of whether or not you will succeed at purchasing the property at auction.
If you are determined to give your offer a chance, be clear on exactly what you are offering the vendor when you discuss it with their agent. This means firstly being clear on what you are buying by reading the Vendor's Statement (Section 32) and Contract of Sale. It is a good idea to have your solicitor or conveyancer read it on your behalf to help you understand the legal jargon so you know what it is you will receive if you succeed in purchasing the property.
Your offer is not just the price you will pay, it also includes the settlement period, the deposit you will be making, when this is to be paid and any other terms and conditions involved in your offer to purchase. Usually an offer prior to auction is made on an unconditional basis, meaning the contract is not conditional on finance being approved by the bank nor any other special condition. You need to check with your lender to ensure they will provide the necessary funds at settlement.
The estate agent may request your offer be made using the formal documentation and in this case you will be required to sign the contract of sale, the Vendor's Statement and pay a deposit so that all the elements of your offer may be legitimately considered. If the vendor is prepared to sell to you prior to auction, they may ask their agent to contact other interested parties to see if a better offer will be made before they accept it. It is the agents duty to communicate with these other parties who wish to be kept informed on the progress of the sale however the particulars of the offer itself may not be revealed to other prospective buyers.
If another offer is received by the agent, the agent will advise you of this however the particulars of that offer may not be revealed to you in the interests of fairness to all parties. Should the vendor accept your offer, they may simply sign the contract and the deal is done!