What does it mean if an agent is quoting $1.3M for an auction property?

If I offer $1.3M will they sell it to me prior to auction? We have heard this question in numerous forms over the years – so many people get confused by Sydney’s auction price quoting system.

The fact they are quoting around $1.3M really means that they really want more than $1.3M. If the property goes to auction and the best offer they get is $1.3M, they might then sell for that price – but they might not. But for a buyer to buy it prior to auction, they need to make an offer that will entice the vendor to sell before the auction – as all vendors hope to get competition that will give them a price over their reserve. (I am not even going to venture into the area that deals with what price the agent put on their vendor’s agency agreement).

Without having done any pricing research on this property, I would think they’d be thinking at least $1.35M to sell prior to auction. But if there are other interested buyers, this figure can climb. For example, recently we had a client interested in a property that was being quoted as $940K+. I spoke with the agent about an offer and was advised that other buyers had indicated around $1.06M (a big jump, I know, and there were comparable sales to justify this). My clients were very keen on this house and decided to offer just over $1.1M. This would have bought it, had there not been at least three other buyers prepared to pay similar money. In the end, we secured it for $1.125M – and believe it or not, there were two other buyers then prepared to pay more!!

I hope this makes sense? It doesn’t make sense to me half the time…

 

Published:- 10 June, 2010

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Please note: Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.

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