Should I make an offer before the auction? | Infolio Property Advisors https://www.infolio.com.au The Buyers Advocate Melbourne Trusts Mon, 18 Mar 2024 05:45:20 +0000 en-AU hourly 1 https://wordpress.org/?v=5.3.17 Should I make an offer before the auction? https://www.infolio.com.au/pre-auction-offers/ https://www.infolio.com.au/pre-auction-offers/#respond Mon, 18 Mar 2024 05:43:41 +0000 https://www.infolio.com.au/?p=21457 Recently, there’s been a surge in pre-auction offers, a sign of growing buyer activity and the return of competitive auctions. Many home buyers have spent over a year in search of a home. The scarcity of available properties in 2023 made this particularly pronounced. This was especially true for buyers looking for A-grade family homes in blue-chip areas. As market confidence returns this year, along with an increase in property listings, we’re observing a keen interest among buyers to secure quality properties as soon as they come across one rather than waiting for the scheduled auction.

In this market insight article, we’ll walk you through the process of making a pre-auction offer, including what you need to know before making the offer and what to expect after you have made one. 

What is a pre-auction offer?

A pre-auction offer is when buyers make an offer during an auction campaign before the auction day. Once a pre-auction offer is submitted, various scenarios could occur, and understanding what these next steps could be before submitting your offer will be key to your success. A vendor might accept a pre-auction offer for various reasons:  they receive one or more compelling offers, because they need a speedy settlement, or because they would like to reduce the stress associated with the auction campaign. They may also choose to decline the offer on the bassis that they believe they will get a better result at auction. 

How do I decide if I should submit a pre-auction offer?

First and foremost, it’s essential to understand the property’s value, be aware of the steps that follow if you decide to make an offer and ensure you are fully prepared to make an unconditional offer.

  1. Be informed.

To gauge the property’s value accurately, analyse recent sales in the area and have a clear grasp of your financial limits. Communicate with the selling agent to ascertain whether the vendor is open to pre-auction offers and to understand the subsequent process if you were to submit one. Knowing whether your offer would lead to a boardroom auction or a highest and best offer situation is crucial, as it will influence the value of your initial bid.

  1. Be prepared

Ensure your finance is secured. In a pre-auction context, offers contingent on finance are typically not entertained. It’s vital to have your finance pre-approved, positioning you to present an unconditional offer confidently.

Arrange for necessary inspections. Before submitting your pre-auction offer, organise a building and pest inspection. This step is crucial to fully understanding the property’s condition and ensuring you make an informed and appropriate offer.

What is the process after I submit a pre-auction offer?

After concluding your research and due diligence on both the property and the vendor, and you’re prepared to submit your offer, it’s important to know what comes next. There are several possibilities:

  1. Boardroom auction

If the agent identifies several serious buyers and receives an offer that meets the vendor’s expectations, they may reach out to all interested parties to invite them to a boardroom auction. In this scenario, the three to five serious buyers convene—away from the eyes of spectators—in a private setting, often either in the real estate agent’s boardroom or a designated room at the property in question. The process then mirrors a traditional auction, albeit in a more intimate setting, where the highest bid secures the property. Typically, a boardroom auction results in a sale since it’s initiated by the vendor’s acknowledgment of a satisfactory offer.

  1. Highest and best offer

Should the agent receive an offer that’s on the verge of acceptance by the vendor, they might contact all interested parties, requesting their “highest and best offer.” This enables the vendor to either select one of these offers for acceptance or decline them all, opting to proceed to the auction. For buyers, this situation presents a unique challenge: deciding on the value and terms of their offer. Unlike in a boardroom auction, there’s no insight into what competitors might submit, resulting in a constrained view of the property’s current market value. This lack of visibility makes it difficult to gauge how aggressive or conservative one should be with their bid.

  1. Decline the offer

If the vendor deems the offer insufficient, they will outright reject it and proceed with their marketing campaign for the property.

  1. Accept the offer 

If the real estate agent perceives a lack of serious interest from other buyers and finds the offer acceptable, the vendor may opt to accept it outright or request minor adjustments before finalising the deal.

Will I get a better deal if I put in a pre-auction offer?

Submitting a pre-auction offer can benefit you by circumventing additional competition, although it’s somewhat more intricate than a standard offer. One challenge is the absence of a price guide, which can leave you uncertain about the appropriate range for your offer.

With expert guidance, it is possible to negotiate a favourable price and/or terms through a pre-auction offer. However, success isn’t guaranteed, and with limited information, you risk overpaying compared to waiting for the auction.

If you’re considering making a pre-auction offer, we recommend contacting us to guide you through this complex process. Contact our Buyer’s Advocacy team today for a free 15-minute discovery call to discuss how we can help you secure your dream home.

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Purchasing off-market in blue-chip areas https://www.infolio.com.au/off-market-properties/ https://www.infolio.com.au/off-market-properties/#respond Wed, 14 Feb 2024 05:13:46 +0000 https://www.infolio.com.au/?p=21373 If you’re searching for a property in the $6 million plus range, you will have noticed that some properties are selling without them even hitting the market, and you only find out once the transaction is complete. It’s not uncommon for high-end properties in blue-chip suburbs to be sold off-market, and we’ve noticed a spike in off-market sales in areas such as Brighton, South Yarra, Toorak, Armadale and Albert Park. Navigating this market as a buyer can be confusing and very time-consuming.

Another trend is the sale of properties off-market that are nearing completion of construction. Sellers offer buyers the opportunity to purchase a brand-new, untouched home without the associated construction risks. In some cases, buyers have a brief window to customise fixtures and finishes before finalising the purchase and moving in. This allows buyers to personalise their new home without undertaking the uncertainties of a construction project.

So, what constitutes an off-market property, and what steps can you take to ensure you see all market opportunities? This article will delve into this to provide a comprehensive understanding of off-market transactions and strategies to avoid missing out on them.

What is an off-market property?

An off-market property is a property that is available for sale but not publicly advertised. It may lack a visible “for sale” sign, but the vendor is willing to sell. Typically, off-market sales involve a seller opting not to advertise through conventional channels, entrusting their real estate agent to connect with potential buyers through alternative means.

Why would someone sell off-market?

In many instances, off-market listings are pre-market opportunities. The seller might be gearing up for an official on-market campaign but is open to considering offers beforehand, aiming to save time or gauge market interest. If unsold, these properties may later hit the market when prices have risen, competition is fiercer, and prices are higher.

Alternatively, a vendor may opt for an off-market sale due to various reasons:

  1. The property may not be presentable, and the owner needs more resources or time to address this.
  2. They may have privacy concerns, especially for well-known individuals who prefer to keep their circumstances confidential.
  3. The vendor seeks a swift and hassle-free transaction.

When a real estate agent handles an off-market property, they often reach out directly to their top clients to find qualified leads, including trusted buyer advocates or investors they’ve worked with previously. They may also contact buyers who recently missed out on similar properties the agent had for sale. They aim to sell the property as quickly as possible for the highest price.

How can I get access to off-market properties?

Real estate agents often engage with hundreds of would-be buyers daily, and you have to make a big impression to get on top of their calling list. Professional relationships aren’t built in a day, which is why it’s beneficial to go through a buyer’s advocate. We’ve been working on our relationships with real estate agents for over 20 years. Real estate agents also know that advocates work with serious clients who are hot buyers, so they are often the first people who get called to view and buy off-market properties.

Alternatively, staying top-of-mind with multiple local real estate agents is crucial to ensure you’re notified when suitable properties arise.

Why buy Off-Market?

  1. See the whole market: even if an off-market listing isn’t right for you, it’s good to know everything out there, not just what’s advertised publicly.
  2. Exclusive Access: Accessing off-market properties provides a unique advantage as most buyers won’t have this privilege. This exclusivity reduces competition and enhances your chances of finding the perfect property.
  3. Negotiate a good deal: If negotiated skillfully, off-market deals can often result in favourable terms for buyers. However, it’s important to note that vendors of off-market properties may have high price expectations. Effective negotiation tactics and price conditioning may be necessary to secure a good deal. Sometimes, the vendor’s priority is a quick, quiet sale, not necessarily maximising the price. 

Do you want to see the whole market, including off-market properties? Contact our Buyer’s Advocacy team today for a free 15-minute discovery call to discuss how we can help you find your dream home.

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A Property Boom Is Coming. Are You Ready? https://www.infolio.com.au/a-property-boom-is-coming/ https://www.infolio.com.au/a-property-boom-is-coming/#respond Thu, 08 Feb 2024 03:19:13 +0000 https://www.infolio.com.au/?p=21366 If you’re waiting for the bottom of the market, you’ve already missed it. We typically avoid recommending specific ‘buy now’ timings to avoid any appearance of bias. However, with 25 years in the property industry and experience with various market cycles, I feel it’s important to convey to our loyal clients that the current scenario is one of those exceptional moments.

I cannot overlook the evident pent-up demand and the solid property fundamentals that indicate we’re on the verge of a boom. Investing $6 million in the right house in the right area today could yield a value surpassing $7 million in the next 12-18 months. Delaying by a year might mean paying an additional $1 million or getting less for the same investment. The maths is simple.

Economists say prices will decline; should I wait and see?

Personally, I’m growing weary of the numerous forecasts predicting a downturn or even a property bust. Some so-called ‘expert economists’  have projected a 4% decline in property values in Sydney and Melbourne in 2024. Amidst conflicting headlines in newspapers, it’s no wonder people find themselves in a state of confusion.

 

Here are the two reasons they are wrong:

  1. History tells us: In 2023, many economists foresaw a decline in property prices due to projected rising interest rates. Contrary to these expectations, national prices grew by 8.1% (Core Logic).
  2. The property market is a separate economy: Property prices differ from the share market. Housing is a fundamental human need, so it will operate differently and always has.

All the key property fundamentals point towards a year of growth and we are committed to positioning our clients to maximise their property investments.

What are the fundamentals driving this boom?

  • Interest rates: Despite 13 rate rises over the last 18 months, property values rose in 2023. We are now welcoming in 2024 with inflation stabilising and a potential interest rate cut later in the year. Once this rate cut comes, and we believe it will, prices will boom. If you wait until this time to buy, you will have missed out on substantial growth and potentially your opportunity to buy in.
  • Supply shortage: The housing supply shortage is a result of decades of inadequate new home completions and policy decisions failing to match the pace of population growth and accommodate the increase in smaller households. Forecasts for 2024 predict a slowdown in new housing starts to approximately 155,000, marking the lowest figure since 2012.
  • Population growth: The existing housing shortfall collided with robust population growth in 2023. Although the growth rate is expected to slow from the peak of last year, migration will persist at a pace that housing cannot match.
  • A constrained construction sector: The construction sector is returning to normal growth rates. However, persistent trade shortages and elevated costs continue to pose challenges for homeowners and developers. 
  • The tightest rental market on record: The current rental market is the tightest on record, with the rising cost of renting prompting many first-home buyers to stretch themselves to make a purchase. It is this group that is acquiring previously investor-owned properties entering the market in greater numbers.

What about the weakening economy?

Some economists are also tipping the economy to soften and distressed sales to hit the market in high numbers. While there are pockets of vulnerability (as we always say, there are markets within markets), particularly in the mortgage belt regions and areas popular with first home buyers, where borrowers typically have less home equity. However, family homes in blue-chip suburbs will not be impacted by this on a scale that would impact price growth.

 

My parting piece of advice.

The supply shortage will only become more evident as the year progresses and more buyers enter the market. This will bring back the FOMO (fear of missing out) mentality we observed in 2020 and 2021. My advice is to buy now before the rush; if you wait until everyone else is buying, you’ll be waiting for increased competition and, therefore, increased prices.

 

Contact us today for a  free 15-minute discovery call. We will share our views on the property market and discuss how we can ensure you optimise your property transactions and decisions. 

 

Lauren Staley

Managing Director

Infolio Property Advisors.

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2024 Melbourne Property Market Predictions https://www.infolio.com.au/2024-market-property-predictions/ https://www.infolio.com.au/2024-market-property-predictions/#respond Tue, 12 Dec 2023 23:40:55 +0000 https://www.infolio.com.au/?p=21342 For our final market insight article of 2023, we sat down with Infolio’s Managing Director, Lauren Staley and Infolio’s Head of Strategic Growth, Nicole Hiddlestone, to talk about their predictions for the property market in 2024. We deep dive into some hot topics influencing buyers, vendors, investors and renters, covering issues like interest rates, property prices, rental availability and government policies.

Q: When will there be more family homes available on the market?

[Lauren] This year’s spring selling season saw an increase in new listings by 30.8% in Melbourne. This certainly added to the consumer sentiment. However, it is essential to note that we were coming off a low base, and most of the stock hitting the market was ex-investor rather than family homes.

Vendor’s confidence to sell has grown because they feel like we are at the top of the rate cycle, coupled with some sellers just being tired of waiting and or needing to sell, particularly in regional Victoria, so we expect this to lead to some more family homes coming to market in early 2024. However, we expect family homes in blue-chip suburbs to remain tightly held, with turnkey properties in particular to remain hotly contested in 2024. 

The substantial increase in public sector infrastructure spending will continue to make it difficult and expensive for the private sector to find materials and labour. This will likely limit the potential for new housing supply through 2024 and increase the competition for turnkey properties.

Q: Will interest rates go down in 2024?

[Lauren] Of the big four banks, only NAB thinks we have yet to hit the peak interest rate of the big four banks. The others expect rates to plateau for most of 2024, with some predicting we will see a modest decrease towards the end of the year.

  • CBA: Peak of 4.35% in November 2023, then dropping to 2.85% by May 2025
  • Westpac: Peak of 4.35% in November 2023, then dropping to 2.85% by December 2025
  • NAB: Peak of 4.60% by February 2024, then dropping to 3.10% by Feb 2026
  • ANZ: Peak of 4.35% in November 2023, then dropping to 3.35% by June 2025

However, only time will tell if borrowers will see some relief to their mortgage repayments next year.

Q: Will house prices come down?

[Lauren] Following modest growth in 2023 (Melbourne is up approximately 4.7%), we expect house prices will continue to increase in 2024 by about 3-4% in Melbourne (that’s a $90,000 to $120,000 increase on a $3 million property). With increasing migration and a lack of available family homes ready to move in, there will continue to be a supply and demand imbalance. Turnkey homes in blue-chip areas are expected to perform the best.

Melbourne will likely see a slight dip during January before growing again as we enter the autumn market. 

Q: Will we see more ‘distressed’ selling in 2024 due to high-interest rates and higher unemployment?

[Lauren] Distressed selling is when a vendor can no longer afford to hold their property for various reasons (i.e., employment, changing family circumstances, or rising interest rates). We tend to see this more often in investment properties and holiday houses rather than family homes, as vendors usually try to hold their primary place of residence for as long as possible.

With unemployment predicted to rise from 3.6% (current) to approximately 4.25% in 2024, we expect a slight increase in distressed selling. This is already starting to happen in Sydney’s outer ring. However, the mass distressed selling predicted by some media outlets earlier this year, which was meant to happen due to the mortgage cliff, is not anticipated.

According to the RBA, around 94% of owner-occupier borrowers can still pay their mortgages and essentials without dipping into savings. And for the small group of households whose essential expenses exceed their income, about 70% have enough savings to fund their expenses for at least six months.

Q: Will investors come back into the market in 2024?

[Lauren] Government policy is currently stacked against investors, with rising taxes and limited incentives to own investment properties. While we are seeing a small number of investors return to the market, we don’t expect a mass return of investors in the short term. Most investors are unlikely to return to the market until interest rates and rental returns stabilise and show value again, which we don’t anticipate until 2025.

Q: Will it be easier to find a rental property in 2024

[Nicole] We have hit record migration numbers of approximately 600,000 nationally this year. This is expected to drop to 460,000 in 2024, providing some reprieve from the growing demand for rental properties. However, the rental crisis will not likely ease until at least 2025, when some supply is expected to hit the market.

Home completions in 2024 are forecasted to drop to 153,000 homes, meaning we are still in a significant deficit compared to population growth. According to the ABS, 2024 building completion rates are expected to be the lowest since 2012. This ongoing imbalance between demand and supply will continue to put upward pressure on rents throughout 2024.

Q: Will build-to-rent continue to grow in 2024?

[Nicole] There is demand for 15,000 and 18,000 new apartments to be delivered annually in Melbourne. There is a significant supply deficit, with Melbourne only delivering approximately 10,000 new apartments in 2024.

This deficit in supply will lead to upward pressure on rents in the short and medium term. While build-to-rent developments should help gradually add to the rental supply, we aren’t likely to see a material increase until at least 2025. 

In the long term, in Melbourne, there are currently 5,500 build-to-rent apartments under construction and another 17,500 in longer-term planning*.

Q: Will rents continue to rise?

[Nicole] A rental market is in equilibrium when the vacancy rate is around 3%. It is currently below 1%. The news for renters in 2024 is expected to remain grim, with SQM forecasting rents to rise an average of 7-10 per cent again next year.

Given the current supply-demand imbalance, it is reasonable to expect elevated continued growth in the rental market over the next three to four years unless significant government intervention changes the outlook.

Q: How might changes in government policies impact the Victorian rental market in 2024?

[Nicole] There are two government policies that we will be watching closely in 2024 that might influence the rental market.

The first is housing affordability initiatives. Any policies aimed at improving housing affordability, such as tax incentives, subsidies or grants for developers for affordable housing, may encourage the construction of more rental properties with a lower than comparable rental market price point, positively impacting renters seeking more affordable rental housing.

The second is regulations on short-term rentals. If the government introduced stricter rules on short-term rentals, it might encourage property owners to shift towards traditional, long-term rentals and increase the supply of long-term rental properties.

Sources: Charter Keck Cramer – State of the Market, October 2023 | SQM – November 2023 property market update.

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Myaman Street, Armadale https://www.infolio.com.au/case-study-home-buyer-armadale/ https://www.infolio.com.au/case-study-home-buyer-armadale/#respond Mon, 11 Dec 2023 21:26:45 +0000 https://www.infolio.com.au/?p=21346 The Brief: Our client was a busy professional working between Melbourne and Sydney. They needed a low-maintenance residence conveniently situated near their children’s schools.

Sale Type: Expressions of Interest.

The Challenge: Locating modern family homes with recent renovations that are low maintenance and situated in the heart of Armadale can be a challenging task. Securing such properties is even more demanding. Recognising the need for swift action and strategic negotiation, we were prepared to move promptly to avoid missing out on the right property.

The Result: We discovered a beautifully renovated haven in Armadale – a property that exuded sharpness sophistication, and boasted low-maintenance features. Following our client’s initial inspection, we successfully secured the property, completing a thorough due diligence process within just three days. During the negotiations, we were able to negotiated a short 21-day settlement, allowing them to settle in to their new home well before the Christmas festivities began!

 

 

]]> https://www.infolio.com.au/case-study-home-buyer-armadale/feed/ 0 Armstrong Street, Middle Park https://www.infolio.com.au/case-study-home-buyer-middle-park-armstrong/ https://www.infolio.com.au/case-study-home-buyer-middle-park-armstrong/#respond Mon, 11 Dec 2023 03:37:05 +0000 https://www.infolio.com.au/?p=21339 The Brief: Our clients were moving from their big family home in Balwyn.  They wanted to downsize to a low maintenance home in Middle park that was close to the village.

Sale Type: Competitive auction (passed in and negotiated privately).

The Challenge: There was a very limited supply of homes that were big enough and good enough quality for our client.

The Result:  Infolio was thrilled to successfully secure this idyllic Middle Park property for our clients. Despite the presence of multiple active bidders at the auction, the property was passed in on our bid. Subsequently, we negotiated the final sale privately, ensuring a successful outcome for our clients.

 

 

]]> https://www.infolio.com.au/case-study-home-buyer-middle-park-armstrong/feed/ 0 Danks Street, Middle Park https://www.infolio.com.au/case-study-home-buyer-middle-park/ https://www.infolio.com.au/case-study-home-buyer-middle-park/#respond Mon, 11 Dec 2023 03:31:36 +0000 https://www.infolio.com.au/?p=21336 The Brief: Infolio were delighted to act as vendor advocates for this exceptional property, one of Middle Park’s most desirable addresses. 

Sale Type: Expressions of Interest Campaign.

The Challenge:  Given properties of this size rarely come to market in Middle Park, we recommended our client run an Expressions of Interest campaign to maximise buyer tension in a discreet environment.

The Result: We were thrilled to collaborate seamlessly with Marshall White to achieve a sales result above our client’s reserve price.

 

 

]]> https://www.infolio.com.au/case-study-home-buyer-middle-park/feed/ 0 Wallace Avenue, Brighton https://www.infolio.com.au/case-study-vendor-advocate-wallace-brighton/ https://www.infolio.com.au/case-study-vendor-advocate-wallace-brighton/#respond Mon, 11 Dec 2023 03:10:22 +0000 https://www.infolio.com.au/?p=21333 The Brief: In April this year, we secured this stunning Brighton home for our clients. In August, they engaged us to act as their vendor advocate as they were moving overseas. Recognising their preference for a more discreet and efficient approach, we advised them to pursue an off-market sale, ensuring a streamlined process aligned with their preferences.

Sale Type: Private Sale

The Challenge:  Given the extensive criteria in the brief, we focused initially on refining the search area to present the finest options to our client without overlooking any possibilities. While the geographic scope was broad, the rest of the brief was clear. Our task was not only to identify the right property but also to skillfully negotiate with the vendors to align with our proposed price and terms.

The Result:  Collaborating with Marshall White, we not only achieved a fast and effective off-market sale, we also helped them make a $600,000 gain on their primary place of residence in just four months. Off-market transactions often involve intricate strategising and close collaboration. Working alongside Marshall White and our client, we ensured that the property was sold for the best possible price and on terms that suited our client’s preferences.

 

 

]]> https://www.infolio.com.au/case-study-vendor-advocate-wallace-brighton/feed/ 0 Irvine Avenue, Mount Martha https://www.infolio.com.au/case-study-holiday-home-buyer-mount-martha/ https://www.infolio.com.au/case-study-holiday-home-buyer-mount-martha/#respond Mon, 11 Dec 2023 03:03:41 +0000 https://www.infolio.com.au/?p=21330 The Brief: Our mission was to discover the ideal beach house for our client’s family retreat, capturing the essence of rustic charm. The criteria included an access road with a rugged, natural feel, expansive land, and proximity to one of Melbourne’s finest beaches. The desired locations ranged from the scenic Portsea and Sorrento to the tranquil Mount Martha, extending down to the picturesque Lorne.

Sale Type: Private Sale

The Challenge:  Given the extensive criteria in the brief, we focused initially on refining the search area to present the finest options to our client without overlooking any possibilities. While the geographic scope was broad, the rest of the brief was clear. Our task was not only to identify the right property but also to skillfully negotiate with the vendors to align with our proposed price and terms.

The Result:  We discovered a breathtaking, architecturally designed home that not only met but exceeded expectations. With ample space to accommodate the addition of a pool and tennis court, this exquisite residence promises to be a cherished sanctuary for the beautiful family for many years to come.

 

 

]]> https://www.infolio.com.au/case-study-holiday-home-buyer-mount-martha/feed/ 0 Canberra Grove, Brighton East https://www.infolio.com.au/case-study-home-buyer-brighton-east-2/ https://www.infolio.com.au/case-study-home-buyer-brighton-east-2/#respond Mon, 11 Dec 2023 03:00:19 +0000 https://www.infolio.com.au/?p=21326 The Brief:  Our lovely long term clients were looking for a family home in Brighton or Brighton East. 

Sale Type: Off-Market.

The Challenge:  A-grade family homes in the best pockets of Brighton and Brighton East only come up every now and then so we knew that finding the ideal property in a great area was going to be chalenging.

The Result:  We heard from our real estate agent network that this property was potentially going to hit the market soon, but that the vendors were open to receiving offers so that they could avoid the hassel of going to market. We were excited to take our clients through this beautiful home in one of Brighton East’s most desired pockets and ultimately secure it for them within their budget.

 

 

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