Have you ever rejected a property because it was advertised as a Tender? You are not alone. Many buyers find this approach to buying extremely frustrating. Today my goal is to provide you with 5 reasons why you shouldn’t discount a property just because it is being sold by Tender. I am also going to provide answers to the 4 most common objections to buying through tender.
Let’s get started.
5 reasons to buy your new home through Tender:
1. The most desirable properties are sold by Tender or Auction.
The nicest houses are going to attract a lot of interest no matter how they are sold. Real estate salespeople know this and are more likely to market these properties through a Tender or Auction to maintain some control of the process and make it easy for a large number of potential buyers to know exactly when are where the property will be available for sale. If you choose to ignore these houses it is highly likely that you will be ignoring the best properties available in your area.
2. Owners selling by Tender are motivated to sign an offer.
Owners will often invest $1,500 – $3,000 into the marketing of their property to attract as many buyers as possible in a short period of time. This creates a situation where Vendors have “skin in the game” and are determined not to see their investment go to waste. There is urgency to achieve a sale.
3. The rules are clear.
Have you ever visited a home you liked and then received a call from the agent 4 hours later saying an offer has been received and there is now a 24-hour deadline in place? Have you ever taken time out on your weekend to visit an open home just to find the property is already under contract or sold?
With a Tender or Auction process, you know exactly when the property is for sale and how long you have to complete your homework before placing an offer. The rules for buying a clear form the get-go.
4. More time to do your research.
Buyers remorse happens when you are rushed into making a decision (for example with the 24-hour deadline mentioned above) and it is not a great feeling, especially when the purchase is worth $400k – $500k. When buying through a Tender or Auction you have a reasonable amount of time to consider the gravity of your upcoming purchase, complete a thorough investigation of your future home, gather all the facts and make an informed decision regarding the purchase of your biggest asset.
5. Slowing down is not a bad thing.
We have grown up as the “now-now” generation. We want everything yesterday. Stop and think about it for a second though, you are not just buying a pair of shoes here. You are taking on a 25 /30-year mortgage commitment. This is serious stuff. Shouldn’t you have time to visit your future home 2 or 3 times before making an offer?
Isn’t that better than rushing into a decision to offer on a home you have only seen once, hoping to secure it before the first open home?
Jumping in the deep end without proper research is seldom a good idea.
4 common objections to buying at Tender:
1. “How can I tell how much the house is worth?”
Do you really need an agent to tell you what a house is worth? Do you really trust their opinion anyway? If buyers didn’t know value then why is it that houses priced 20k too high can sit on the market for months? While houses priced 20k too low will often sell before their first open home?
Once you have looked at 20+ houses in a small area and reviewed their sale prices you will very quickly become a market expert. When you visit a priced home you instantly decide whether that price represents good value to you. So why should your perception of value suddenly switch off when no price is provided to begin with?
2. “But I don’t want to buy in competition!”
It is natural to want to be the only buyer and to avoid competitive situations. The problem is, all the nice homes in our area will usually attract multiple offers, whether they are sold by tender, price, or by negotiation even in a down market. Attractive properties always sell well. Show me a home that no one else wants and I’ll show you a home you won’t have to compete with others to buy.
Think about when you come to sell 5 or 10 years down the track though– do you want a home that sells quickly with competing offers? Or a home that attracts little interest and stays on the market a long time. I know which one I would rather have.
3. “Buying through Tender is too expensive.”
Completing your homework on a property can get very expensive. That is why most of the properties I market will now have a LIM report available. We also endeavour to provide builders reports where possible. This is not meant to substitute your own advice however it should provide you with a starting point for your own research, save you some money and give you an idea of the current standard of the property. If there are issues, we want to know about them up front where possible, not after you have had your offer accepted.
Tender or not, completing or viewing a builders report is a good idea before you place an offer on any home. Yes it will cost money and you might miss out on the home but this is a big purchase you are about to embark on and there is going to be some expense. If you are concerned about cost the best approach is to submit a tender with conditions for your protection. This is very common and almost every week we sell properties to buyers with conditional offers.
4. “Don’t I have to attach a deposit cheque?”
No. Every part of a Tender document is negotiable. You can choose not to submit a deposit with your offer and it will still be presented to the owner. Attaching a bank cheque is a great idea and it makes your offer look extremely attractive to a seller, however it is not compulsory for the properties we market.
My hope is that this information might encourage you to consider properties for sale by Tender in your search for a new home. If you choose not to, you must just be missing out on some of the best houses available to you and your family.
Till next time…
Real Estate Blogger