Negotiating Before Auction
Can You Negotiate Before Auction?
A common misconception among property buyers is that once a property is scheduled for auction, negotiation is no longer possible.
In reality, many properties are sold before auction.
Depending on market conditions, buyer competition and seller circumstances, opportunities may exist to negotiate and purchase a property prior to the auction date.
Understanding how pre-auction negotiations work can help buyers make more informed decisions and determine whether an early offer is appropriate.
Why Sellers Accept Pre-Auction Offers
While some sellers prefer to proceed to auction, others may consider strong offers beforehand.
Reasons may include:
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Certainty of sale
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Avoiding auction risk
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Time pressures
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Attractive contract terms
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Strong purchase price
Every seller's situation is different, which is why understanding their position can be an important part of any negotiation strategy.
Advantages Of Negotiating Before Auction
Pre-auction negotiations may provide several potential advantages.
Avoiding Auction Competition
At auction, buyers compete publicly.
Negotiating beforehand may allow buyers to secure a property before bidding competition develops further.
Greater Flexibility
Pre-auction negotiations may allow discussion of:
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Settlement dates
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Contract conditions
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Deposit arrangements
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Other terms important to either party
This flexibility is often unavailable once bidding begins.
More Time To Make Decisions
Auctions can create significant time pressure.
Negotiating beforehand may allow buyers additional time to:
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Review information
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Obtain advice
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Assess risks
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Consider negotiation options
Risks Of Negotiating Before Auction
While opportunities may exist, there are also risks buyers should understand.
Paying More Than Necessary
A strong pre-auction offer may remove competition, but it may also exceed what would have been achieved through the auction process.
Buyers should consider market evidence carefully before making significant offers.
Revealing Strong Interest
Submitting a pre-auction offer can signal strong interest to the seller and selling agent.
Buyers should understand how this may affect future negotiations if the offer is not accepted.
Limited Market Testing
One of the advantages of an auction is that it tests the market openly.
When negotiating beforehand, buyers may have less visibility regarding actual competition levels.
When Should You Consider A Pre-Auction Offer?
There is no single answer that applies to every property.
Factors buyers may consider include:
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Property demand
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Number of interested buyers
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Time remaining before auction
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Seller circumstances
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Market conditions
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Their own objectives
The most appropriate approach depends on the specific situation.
Understanding Seller Expectations
Before making an offer, buyers should seek to understand:
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Whether the seller is genuinely considering pre-auction offers
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Whether an offer would need to exceed expectations
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Whether the seller intends to proceed to auction regardless
Understanding seller expectations may help buyers determine whether a pre-auction negotiation is worthwhile.
How To Structure A Pre-Auction Offer
A pre-auction offer should generally be considered as part of an overall negotiation strategy.
Important considerations may include:
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Offer price
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Deposit amount
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Settlement terms
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Contract conditions
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Offer expiry period
The structure of an offer can sometimes be as important as the price itself.
Avoid Emotional Offers
Property buyers can sometimes become emotionally invested during auction campaigns.
Common mistakes include:
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Offering beyond budget limits
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Ignoring comparable sales evidence
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Making rushed decisions
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Reacting to perceived competition
Maintaining a disciplined approach is often important when negotiating before auction.
Understanding Selling Agent Tactics
Auction campaigns often involve experienced selling agents.
Buyers may encounter:
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Urgency
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Competition messaging
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Time pressure
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Encouragement to strengthen offers
Understanding how negotiation tactics operate can help buyers make more informed decisions.
Learn more about Real Estate Agent Negotiation Tactics.
How Market Conditions Affect Pre-Auction Negotiations
Different markets may create different opportunities.
Strong Seller's Markets
In highly competitive markets:
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Sellers may be less inclined to negotiate
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Strong offers may be required
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Competition may be significant
Balanced Markets
Buyers may have greater flexibility when discussing terms and pricing.
Buyer's Markets
Negotiation opportunities may be more common where demand has softened.
Negotiating Before Auction Versus Waiting For Auction
Some buyers choose to negotiate early.
Others prefer to wait and participate at auction.
Factors influencing this decision may include:
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Market conditions
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Competition levels
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Risk tolerance
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Property uniqueness
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Financial circumstances
There is no universal strategy that suits every buyer or every property.
Independent Advice Before Making A Pre-Auction Offer
Many buyers seek independent guidance before making a significant pre-auction offer.
This may help buyers better understand:
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Pricing considerations
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Negotiation options
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Market conditions
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Potential risks
iREC's Property Negotiation Service provides independent advice to help buyers better evaluate their position before committing to a negotiation strategy.
Related Property Negotiation Guides
You may also find these guides useful:
Negotiating Before Auction: The Bottom Line
Negotiating before auction can provide opportunities for some buyers, but it also introduces additional considerations and potential risks.
Understanding market conditions, seller expectations, competition and negotiation strategy can help buyers make more informed decisions before making a pre-auction offer.
Every property and negotiation is different, which is why preparation and careful assessment are important.
Need Independent Property Negotiation Advice?
If you are considering making an offer before auction and would like an independent perspective, iREC can help you better understand your options before proceeding.
Discuss Your Property Negotiation Situation
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