real estate manager

Making a pre-auction bid before the house goes under the hammer is a growing strategy for prospective home purchasers.

If you're looking to purchase a property, the competition has never been fiercer, as rising housing prices compel prospective buyers to compete.

Some bidders in the heated property market are making an offer before a home goes to auction. The reasoning behind this is that if you make a tempting enough offer, you may be able to persuade the vendor to sell before the rest of the competitors.

So, how exactly does it work?

How Does Making a Pre-Auction Offer Work?

The first step is to check with the vendor's agent about accepting pre-auction offers. If you answered 'yes,' you can make a written offer before the auction. The bargaining procedure will be similar to that of a private sale.

If your plans change, you should be able to withdraw your pre-auction bid as long as no contracts have been signed.

Seek legal counsel and review the restrictions that may apply to your pre-auction offer. In some parts of Australia, if your bid is accepted fewer than three clear working days before the auction date, you are not entitled to a cooling-off period (time to change your mind).

What are the Pros of Making a Pre-Auction Offer?

There are a few significant advantages to placing a bid before the auction. Again, it is highly dependent on the particular scenario, so consider whether the pros listed below are appropriate to you.

1. You Might Find It Less Stressful

By offering a pre-auction bid, you can eliminate uncertainty and the stress of wondering whether or not you will be the highest bidder - which can be extremely stressful! So, if you are used to being a bit of a "choker" at auctions, making a pre-auction offer may be a good idea.

2. You Can Make the Terms Clear 

By making an offer before an auction, you can negotiate and clearly set out the terms of the sale in the written offer. Without placing a pre-auction bid, you may be unaware of some of the issues that may arise, or what is included in the sale at the auction.

3. You May Get a Better Price

Another benefit to making a pre-auction offer is that if the vendor accepts your offer, you may be able to negotiate a better price than if you had to bid at the auction. Because your offer has already been accepted, the vendor knows that you are serious about buying the property, which may encourage the vendor to offer you a better price than an auction.

What are the Cons of Making a Pre-Auction Offer?

As with many tactics, there are some downsides to making a pre-auction offer. So, consider these before making a pre-auction offer.

1. Your Offer Might Be Too High

If you make an offer before the auction that is too high, the vendor may turn it down or may take it to the auction to test the market. Remember, the vendor doesn't have to accept the offer or negotiate with you, so you may end up wasting valuable time when you could be looking at other properties.

2. You Are Unable to Negotiate

You might not be able to negotiate or revisit the terms of the agreement after the offer has been accepted. It is important to understand the terms of the pre-auction offer before you commit.

3. Your Offer May be Rejected

Offering a pre-auction offer is a riskier move than listing at auction, as the vendor may turn down your offer. There is no guarantee that your offer will be accepted, and you may find yourself out of luck during the hot property season.


Making a pre-auction offer is a bit of a gamble. If your offer is too high or you don't like the terms, you can withdraw it. If you were to list at an auction, you would have less flexibility.

In some instances, you may be able to negotiate a better price if you have already been accepted, but you will have to make sure that you clearly understand the terms of the offer.

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