A Bird In The Hand is worth two in the bush

What would you do? Take the bird you know you have, or risk losing it for a chance you’re not certain of?

An auction is usually looked at as a stressful and emotional process.  For the Vendor, it’s the fear of failure, in public. For the buyer, it’s again the fear of failure. What to do, what not to do? Who do you trust?  What if? All that uncertainty creating a mix of emotion and feelings for both the Vendors & Buyers.

What if I showed you some strategies that can help you decide what to do, and feel confident with your decision, not stressed?

If a buyer wants to buy a property and is prepared to make an offer in the hope to take that property off the market they need to be bold and get the attention of the Vendor. They risk entering into a closed negotiation process which could see them paying more than is necessary to be the highest and successful bidder. This can work out better for the Vendor in some circumstances and the Buyer gets to secure the property at the value they have placed on it. It’s a Win Win situation but you need to know when and how to negotiate.

It all comes down to emotional triggers. If a property stands out and has hit the market in that ‘sweet spot’, there is more of a chance of encouraging a ‘SHUT UP AND TAKE MY MONEY’ sensation….

As a Vendor, you need to have a good relationship with your agent and understand the process they have to work with and negotiate offers with the buyers

As a Buyer, you also need to have a good relationship with the agent and understand the process they have in taking offers.

You can see how this can lead to a conflict of interest in some situations

How do you know who the agent is working for?

An agent is appointed by the Vendor to represent and act exclusively for them.

As a buyer you need to understand that they are working for the Vendor to get them the best result

As a Vendor you need to have faith in this and trust your decision you made when you appointed your agent.

Working as a team has never been so vital for this situation to succeed.

Have the discussion with your agent before the campaign begins and decide if you would be prepared to consider offers prior, or that you would prefer to go through to auction. These clear instructions are necessary at the start so that everyone is working together and knows the rules without any conflict. Of course this will depend entirely on your circumstances, your property and your agent’s ability to negotiate on your behalf.

Having said that, everyone has a price and your agent is legally responsible to present all offers to you so, a buyer can still write up an offer knowing that it must be presented.

You also need to know how your agent deals with this because (believe it or not) they all do things differently.

The strategy they use may impact your decision, which is why you need to ask this when you interview and select an agent.

If an offer is received that’s at an acceptable level and the Vendor agrees, the property is declared ‘On The Market’!

A time frame is usually given of 24-48 hrs and all other buyers are notified the property will be sold and they’ll be given an opportunity to get involved.

This is the time the Vendor needs to make a decision; take the bird in your hand or take a chance on something you may not get?

The strategy for this is actually quite simple though.

With the trust you have in your agent, (which I truly hope you have at this stage) be guided as to who your buyers are, how many you have interested and what level of interest they have. These days, agents have sophisticated data systems they work with and know what properties buyers have been looking at, what properties they have missed out on and have a reasonable profile on what their budget is.

If there is a stand out buyer who is significantly higher than any other or if there’s only one buyer interested, than it’s almost certain that negotiating prior with this buyer will give a better result.

However, if there are buyers that are all within the same range then perhaps the auction situation will push those buyers beyond what they would have been prepared to pay otherwise.

Here are some common negotiating processes I have experienced:

Some agencies have a policy where all buyers have 1 opportunity to write up their best and final offer that will be presented to the Vendor at a specified time. This puts pressure on all interested parties to stretch as far as they are prepared. They will assess the value they see in your property.

Others allow the buyer that puts in the first offer to have a second opportunity to adjust their offer if another buyer gets involved. This also puts pressure on buyers particularly the initial buyer. More often than not, they will find more $’s when faced with the fear of loss

Another policy I’ve seen is where all buyers have multiple opportunities to increase or adjust their offers over a set period of time. They are advised by the agent of all other activity. This is not the best way to buy property and the relationship between the agent and buyer is normally stretched.

There is also the boardroom auction. This is when there has been an acceptable offer made and all buyers that want to take part are gathered into the office to bid for the property. These boardroom auctions are treated differently as well. With some being conducted with all buyers in the same room, or I have even seen some where the price is written up on a board and buyers are bought in one at a time to increase the amount on the board until the property is sold.  I know of a situation where this method took over 1.5hrs…

No matter which method, they are all geared to creating a better result for the Vendor if done correctly.

A closed negotiation process is harder for the buyer because they have no idea who their competition is and how much they are prepared to pay.

Did you know when the negotiations are made 3 business days before or after the date of auction the sale is under auction conditions? That means it is an unconditional sale. A clear advantage of selling a property using an auction method.

If you’d like to know more helpful tips on buying and selling property click here or reach out to ask me any questions you need answered.