Participating in property auctions can be an exhilarating experience, but sometimes a property may pass in, failing to reach its reserve price. While this outcome can be disheartening for both buyers and sellers, it also presents an opportunity for savvy negotiators to secure a favourable deal. Here are some strategies and key considerations for negotiating after a property has passed in at auction.
1. Research Research Research
Before entering into negotiations, conduct thorough research on the property and the current market conditions. Obtain a copy of the auction contract, review the property’s history, and gather relevant information such as recent sales prices of comparable properties in the area. This knowledge will empower you during negotiations and provide a solid foundation for making informed decisions.
2. Understand the Seller’s Motivation
Knowing why the property did not sell at auction can provide valuable insights into the seller’s motivations. Reach out to the selling agent or auctioneer to understand their perspective. The reasons could range from an unrealistic reserve price to a desire for a quick sale. Understanding the seller’s motivations will help you tailor your negotiation strategy accordingly.
3. Assess Your Negotiating Position
Evaluate your own negotiating position and determine your maximum budget for the property. Consider factors such as your financial capability, the property’s value, and your level of interest. Knowing your limits and priorities will help you stay focused and make strategic decisions during the negotiation process.
4. Open Communication Channels
Initiate contact with the selling agent or auctioneer to express your interest in the property and your intention to negotiate. Be professional, courteous, and respectful in your communication. Establishing a positive rapport can lay the foundation for productive negotiations and facilitate a mutually beneficial outcome.
5. Propose a Reasonable Offer
If a property has passed in at auction, it will most likely come back onto the market with a price, so craft an offer that reflects both the property’s value and your own interests. Consider making an offer slightly below your maximum budget, leaving room for negotiation. Present your offer in a clear and concise manner, including any terms or conditions you find important.
6. Focus on Value, Not Just Price
Negotiations after a property passes in should not revolve solely around the price. Highlight the value you bring as a buyer, such as your ability to proceed quickly, flexible settlement terms, or your commitment to the property. Show the seller that choosing you as the buyer can provide additional benefits beyond the price, which could sway their decision in your favour.
7. Be Patient and Persistent
Negotiating after a property passes in may require patience and persistence. The seller may need time to reflect on the situation or receive other offers. Be prepared for counteroffers and maintain an open line of communication to address any concerns or queries promptly. Stay proactive without being pushy, demonstrating your commitment and genuine interest in the property.
8. Seek Professional Advice
Consider engaging the services of a professional buyer’s agent or real estate lawyer to assist you with the negotiation process. These experts have experience in navigating post-auction negotiations and can provide valuable guidance to help you secure the best outcome.
Negotiating after a property has passed in at auction requires a strategic approach, effective communication, and a thorough understanding of the property and market conditions. By conducting thorough research, understanding the seller’s motivations, and adopting a value-driven negotiation strategy, you can increase your chances of securing a favourable deal. Remember to be patient, persistent, and open to compromise while seeking professional advice when needed.
With these strategies in place, you’ll be well-equipped to navigate negotiations and potentially turn a passed-in property into a successful purchase.