“I prefer to stand outside where I can assess whether there is any real competition or just friends who are pretending to be buyers hanging around.”
Hundreds of properties are being passed in at auction as listings spike up for spring time and buyers become a little more cautious.
A pass-in occurs when the top bid falls short of the vendor’s expectations. The property is then passed-in to the highest bidder. That’s when the serious negotiations begin.
So how do you best negotiate? Is it smart to “meet in the middle” or should you stick to your guns on price?
It’s critical at the get-go to be the top bidder because the highest bidder has the exclusive right to negotiate with the vendor first.
What happens next is that the selling agent will invite you to step inside the property and start negotiations. Meanwhile, other agents will approach the under-bidders to investigate their level of interest and keep them “warm” in case the negotiations with you collapse.
Metropole Property Strategists’ Bryce Yardney says his golden rule is to not follow the agent inside. He says the perceived pressure of having competition outside waiting for an opportunity to negotiate, was a negotiation tool that agents used against buyers.
He recommends quickly finding out what the vendor’s reserve is and then asking: “I understand that’s the price the vendor was hoping for before the auction, but now what is the lowest price he will sell for?”
However, don’t count on not raising your offer to secure the property. You need a flexible view of the purchase, recognising that real estate is a long game, so it may not matter if you pay a tad more.
At Craig Tracey Lending we can help you negotiate at auction by giving you a Property Report that’s full of useful information about the property, it’s value and recent sales in the local area. Click here to order your free Property Report: Order your free property report
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