In Sydney, more properties listed for auction are now selling prior due to cooling market conditions. With more homes for sale, buyers have more choice and more bargaining power, so sold priors are becoming increasingly common. 

During the boom when stock was tight, most vendors wanted to go through to auction and let the usual five or so registered bidders battle it out to maximise the sale price. 

Today, competition has reduced to an average of one to three bidders per auction. The instances of buyers going quiet before an auction are increasing, with their attention diverted away by more and more new stock. 

These market conditions give buyers greater confidence in making pre-auction offers – often within the first week of a campaign; and vendors are more likely to consider them. 

Top tips for buying prior to auction

  1. Ask the agent if the vendor is willing to consider pre-auction offers. If so, tell the agent you are interested in the home and you want to be included in any negotiations. Sold priors can happen quickly – often within 24 hours, so it’s important to flag your interest even before you’ve made an offer
  2. Let the agent know you have pre-approved finance. This is a very important signal that you’re a serious buyer
  3. Offer a price that is close to your walk-away figure. Vendors will only sell early in a campaign if a strong price is put forward. As with all negotiations, the vendors will assume your first offer isn’t your best so leave some wiggle room
  4. Do more than a verbal offer. Sign the contract and attach a cheque for the deposit. Alternatively, put your offer in writing and mention you have your finance approved 
  5. Waive your right to a cooling off period to show you’re serious 
  6. If your first offer is rejected, consider offering an odd amount. For example, rather than offering $860,000 or $865,000, offer $863,500. An odd amount implies that you’re close to or at your financial limit 

A word of advice for sellers

In Sydney today, the best quality properties are still attracting strong demand and doing very well at auction.  If you have an A-grade property that ticks all the boxes for buyers, your agent might still recommend proceeding to auction rather than taking a strong early offer. 

Don’t be afraid to do this. It’s the A-grade properties that are still achieving hundreds of thousands above reserve. If your agent tells you there are several buyers with similar budgets who genuinely love your home, then auction is still the best way forward.  

When to accept a pre-auction offer 

Before you accept a pre-auction offer, there are a few factors you have to weigh up. You need to do a reality check on your price expectations, taking into account recent sales during your campaign and market feedback on your home. 

Then you need to listen to your agent, who will use all their expertise to determine whether you should accept the offer or not. A good agent will not let you undersell your home. 

Generally speaking, it usually comes down to whether the buyer making the offer has any competition from other buyers at the same price level. 

For example, say your best pre-auction offer (after some negotiating) is $1.5M. If all other buyers are talking $1.4M-$1.45M, your agent will probably recommend you take the offer. 

If you proceed to auction, the buyers will all go to $1.45M and then the best buyer will be on their own from there, with no reason to bid even close to $1.5M.

In today’s market, we expect to see many more homes selling prior. With auction clearance rates consistently around 60%, both buyers and sellers are aware that the market has changed and there is more opportunity for buying and selling prior to auction day.