Sometimes selling a property through auctions can be seen as the best way to sell it quickly or achieve a higher price, as the auction process creates a sense of urgency and a feeling of competition between potential buyers as they bid against each other to purchase a property. Once the reserve price is reached, the highest bidder becomes the successful buyer.In the run-up to your day of sale, you could receive a few pre-auction offers for your home from interested buyers. You might be wondering whether to accept the offer or not and what the advantages of accepting such an offer might be to you as a vendor. As always, it is recommended discussing any offers with your real estate agent to ensure you have the right advice for your situation, but here is a basic guide if you get a pre-auction offer on your DC home.
What Is A Pre-Auction Offer?
A pre-auction offer occurs when an interested buyer, in the lead up to auction day, attempts to purchase your home before the auction actually occurs. This is a way of avoiding the auction process for both the buyer and the seller.Sometimes, the buyer may want to make a conditional offer for the property, which is not allowed on auction day in which sales are unconditional at auction. If you get a pre-auction offer on your DC home, you often feel as pressured and nerve-wracking as the auction day because it can be a troublesome decision since it is often hard to truly know the buyer’s level of interest on your property.
Once a pre-auction offer on your DC home is presented, you have three options either:
(1) Accept the offer, sign it and it’s a done deal
(2) Decline the offer, and wait for the auction date or
(3) Provide a counter offer or bring the auction forward using the buyer’s initial offer as an opening bid.
What Happens If I Accept?
If you choose to accept the offer, one of two things will happen. If you desperately want to sell, you can cancel the auction altogether and sell by tender.
This is generally not a good idea, except in special circumstances. Keep in mind that selling before the auction day can result in a lower price due to a lack of competition, as well as potentially having signed up for a sale that is conditional.
On the other hand, a pre-auction offer can be accepted but the auction continues. This usually results in the auction being brought forward to occur within the next few days, and the offer price is the starting bid, but if no higher bids are received then the property is sold at the offered price. Of course, other buyers can still bid and the property will then sell to the highest bidder. This is the best of both worlds, as you have accepted an offer that is reasonable, you have the chance to up the price at auction as well and you are getting your home sold quickly, too.
Therefore, if you get a pre-auction offer on your DC home, you have to assess the market to understand the true value of your home. Having a figure that is in line with market expectation will help to educate and aid any pre-auction offers. Then, conduct your own research and discuss with your agent so you will be able to determine whether the offer is a competitive one. Market conditions can sway the decision to accept or reject. When the market is performing well vendors are likely to find themselves with several pre-auction bids.