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What you need to know before making a pre-auction offer

Unlike auctions, there is minimal legislation to guide you in negotiating a deal pre-auction. Agents can adopt multiple rules of engagement so it is important that you use a trusted and transparent real estate agent that establishes the rules from the outset, or that you ensure an agreement on these rules. It must be understood that an offer accepted less than three-clear business day before the auction date will not have a cooling-off period.

Some agencies elect to conduct a boardroom auction whereby competing buyers bid against one another within the real estate agent’s office. This method reduces any lack of transparency as both parties bid against one another without the risk of manipulation from the agent or being bluffed.

‘Best and highest’ is a method adopted by some real estate agencies whereby a pre-auction deadline is set and the buyer’s best and highest bid must be made. The outcome of the process can be twofold with some buyers achieving a more favourable purchasing price when they may have otherwise being outbid at an auction. By contrast, some may find themselves in a position where they have stated their best and final bid however their guessed price is well in excess of the market price. This can lead to disappointment and regret as you are simply flying blind during this process.

Bidding over the phone or email is another approach some agents or vendors prefer. This approach is essentially like an auction, minus the crowd, whereby a number of bids back and forth occurs with the highest bid winning.

These techniques reveal the roller-coaster ride many encounter when negotiating a price for a property. The reliance on trust and transparency of the agent is key to ensuring that you as the buyer are well informed and can act confidently. It’s it important to separate your emotions from negotiation and you hold your cards close to your chest. This is to ensure no rash decisions are made and you are not compromising your negotiation power. In depth knowledge of what you are buying backed by extensive research into the value of the property and surrounding market is important to ensure you are laying down the right price. Furthermore, a sound and clear understanding of your financial capacity is fundamental in knowing your upper limit. This is done via pre-approval which can be arranged by 40 Forty Finance so you can bid confidently.

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