Offer on a house set to be auctioned. Agent compliance question.

Forums › Home Workshop DIY › Offer on a house set to be auctioned. Agent compliance question.

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#1991042 7-Apr-2018 13:50

Dingbatt: I guess the only other thing to consider is that, because the agent works for the vendor (regardless of how much they appear to be your friend), they may have been instructed to not present bids under a certain value.

The best outcome I have seen (admittedly not in a frenzied market) was when friends employed their own agent to negotiate on their behalf. His payment was based on how much he could save them. In the end they reckon he saved them $80-100k for an outlay of about $5k. Plus much less stress.

Agents have to work in the best interest of the vendor, but they still have to be fair to the buyer. Although it is somewhat ironic, because it is the buyer who ends up paying for he agent, as the money usually comes out of the deposit the buyer pays.If I was selling, I would definitely use an agent to do the negotiation etc, they do have their place, but would do it on a negotiated fee.

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eracode

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#1991076 7-Apr-2018 15:11

It’s simple - in an auction situation, if a prospective purchaser wants to make an unconditional offer prior to the auction date, the agent is required to (i.e. must) present it to the vendor - even if it’s a low-ball or unrealistic offer. The agent can’t refuse to present the offer - which is made in writing by way of an Agreement for Sale and Purchase signed by the prospective purchaser.

If the vendor rejects the offer, that’s the end of it. If the vendor wants to accept it, the auction is brought forward (to give other prospective purchasers who have seen the property a chance to bid) and will usually be held within 2-3 days. The offer that’s on the table will be the reserve price and the opening bid at the early auction.

Sometimes I just sit and think. Other times I just sit.

billgates

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#1991090 7-Apr-2018 15:41

Great thanks for replies so far. We are now using an agent from a franchise that has been showing us few properties in the area including of his competitors franchises. The house that we have liked now is of the same franchise agency as the agent but its listed by a different agent so not sure how will the advice regarding pre auction offer and auction go. The auction is not until 24th April which to us is quite far. We like the house. We will else keep looking at houses and never settle one one or potentially miss out on others in between waiting on a selected house auction dates hence offers.

Do whatever you want to do man.

billgates

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#1991093 7-Apr-2018 15:45

shk292:
What's to stop you writing your offer down and posting it in the vendor's mailbox?

I will seriously consider this option moving forward if the offer is not presented by the agent. Thanks.

Do whatever you want to do man.

eracode

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#1991094 7-Apr-2018 15:47

If the agent you’re dealing with is not the listing agent - but is from the same firm as the listing agent - that does not change anything of what I outlined above. All that means is that the two agents will split any commission that arises if/when the property sells.

Sometimes I just sit and think. Other times I just sit.

eracode

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#1991101 7-Apr-2018 15:52

billgates:
shk292:
What's to stop you writing your offer down and posting it in the vendor's mailbox?

I will seriously consider this option moving forward if the offer is not presented by the agent. Thanks.

Once again: The agent cannot refuse to present any unconditional offer to the vendor.

Sometimes I just sit and think. Other times I just sit.

billgates

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#1991105 7-Apr-2018 15:56

eracode:
billgates:
shk292:

What's to stop you writing your offer down and posting it in the vendor's mailbox?

I will seriously consider this option moving forward if the offer is not presented by the agent. Thanks.

Once again: The agent cannot refuse to present any unconditional offer to the vendor.

I would rather take the non provacotive approach in first instance considering no harm done as I am wanting to purchase a house but it's good to know that I can also enforce this.

Do whatever you want to do man.

eracode

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#1991115 7-Apr-2018 16:05

Because the vendor has signed an agency agreement with the agent, the vendor cannot deal directly with you - nor can you deal directly with the vendor. Everything needs to go through the agent. Sorry but putting an informal offer on a piece of paper into their letterbox isn’t actually going to work or achieve anything. It may be seen as being more provocative than doing it the correct way - through the agent (unfortunately).

If the vendor does like your informal offer, all that will happen is that the agent will need to formalise the offer in an Agreement for Sale and Purchase and then you’re back at Step 1.

Sometimes I just sit and think. Other times I just sit.

itxtme

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#1991248 7-Apr-2018 20:33

I think you should consider the fact that your offer is too low. The auction example you gave would have likely had the vendor in the room, so they would have seen you bid against the offer. If you truly were the only one bidding why did you bid at all? Better off negotiating after the auction.

Agent want to turn over sales because it equals dollars for them. 20k sales difference means little to the agent, so them saying they wont present it I think speaks more about the amount you offered, than anything else.

billgates

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#1991249 7-Apr-2018 20:51

The vendor for the house auction we went to was for a brand new house. Vendor is a builder. The vendor flew to Fiji I was told on a holiday the same morning as the auction day and would have maybe just landed there when the auction finished. The agent told me this. The offer we made was looking through recently sold houses (brand new and 2 ~ 3 year old builds) on the same street, neighbourhood, size of land, size of floor area, building material used etc. We live in Hamilton so to give you an idea, the house market is slow now compared to last 3 years mad rush and this shows in the auction rooms here and the price bracket that we are offering is in early 7 figures.

This is one of the houses sold recently in an auction for $1 million and 7 thousand dollars. Pre - offer was made and auction occurred within 2 days and property sold within 7 days of being in market. I don't know how much was the pre-auction offer and whether the offer was the winning bid in end or not because no one else turned up.

https://www.oneroof.co.nz/7-michael-terrence-place-waikato-984188

The below link is the house we went to auction for which is 262 sqm floor and rest is counted for portico/alfresco. It's advertised for $1 million and 70 thousand dollars. You decide if you compare the size of land, floor area, the design and features and that spa in the above house is worth $63 thousand dollars less or not than the house in link below. Take landscaping and amount of aggregated concrete used in above house as well. It's a lot and it's not cheap.

https://www.oneroof.co.nz/4-falcon-court-flagstaff-hamilton-city-waikato-993657

Do whatever you want to do man.

Aredwood

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#1991253 7-Apr-2018 20:58

itxtme:

I think you should consider the fact that your offer is too low. The auction example you gave would have likely had the vendor in the room, so they would have seen you bid against the offer. If you truly were the only one bidding why did you bid at all? Better off negotiating after the auction.

Agent want to turn over sales because it equals dollars for them. 20k sales difference means little to the agent, so them saying they wont present it I think speaks more about the amount you offered, than anything else.

Presumably the agent didn't give any prior indication of what the vendor is willing to accept. And it is not up to them to decide what the vendor would accept. Definitely complain to the REAA about that agent.

Also try contacting another agent who works for the same company, and ask them if they could present the offer instead. (select the newest agent, as they will probably be the most hungry to make a sale). As if the vendor accepts your offer, the second agent will get a commission for doing practically nothing.

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#1991270 7-Apr-2018 21:18

Aredwood:

Presumably the agent didn't give any prior indication of what the vendor is willing to accept. And it is not up to them to decide what the vendor would accept. Definitely complain to the REAA about that agent.

Also try contacting another agent who works for the same company, and ask them if they could present the offer instead. (select the newest agent, as they will probably be the most hungry to make a sale). As if the vendor accepts your offer, the second agent will get a commission for doing practically nothing.

The agent did advise $1 million and 40 thousand during the first visit. She also confirmed this figure to another couple during the same open home visit. After the unsuccessful auction, the price has now been bumped to $1 million and 70 thousand dollars. The offer we made after auction ended was for $955k to which the agent said that they will not be presenting it to the vendor. We left and after my wife really mentioning repeatedly at home that she likes the house, couple of days later, I emailed the agent and upped the offer to $1 million to which she has not replied yet at all and I am not holding my breath that they will at all. I provided plenty of examples with evidence of neighbourhood property prices from recent sales including below which was for a brand new build as well after the auction finished in meeting room. Advertised by builder at $980k and sold in auction at $890k.

http://www.peakstonehomes.co.nz/projects/2

https://homes.co.nz/app/address/hamilton/flagstaff/17-batten-drive/L8aLN

I am just annoyed about the fact that the agent did not want to pass on the offer made to the vendor which it looks like by law/rules they should have. I get it if the vendor declines and does not want to sell and that's fine.

Do whatever you want to do man.

eracode

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#1991279 7-Apr-2018 21:33

Contact the manager of the branch where the agent works and tell the manager you want to make an unconditional offer for the property. Go over the agent’s head to un-logjam this.

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PhantomNVD

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#1991291 7-Apr-2018 22:34

My last buy (3 years ago now) the agent also laughed at my offer, as I was well under the asking price, trying to push me for ‘at least’ the asking price. Since I had been looking at the property for over three months (and it had been on the market for nearly 8) I went off to google my options.

I insisted my offer be presented to the seller, and quoted REAA requirements (which I’d googled after being laughed at and refused) and the agent then presented my offer, which was then accepted!

I am now the proud owner, but would never think to deal with that agent/agency when selling my home one day!

networkn

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#1991309 7-Apr-2018 23:12

Weren't you building a new home recently? Perhaps I was mistaken. Irrelevant, but was just curious.

As Eracode has said they must by law present all offers (unconditional).

We have had mixed results with agents. The one who sold us the house we live in now was fantastic, we got a decent deal. I genuinely felt he was working for both sides. Cash unconditional offer helped a lot to secure a good price.

We then got him to sell our existing house which he got 60K over the asking price within 7 days. The day the offer we accepted came in, he had *6* other offers. He presented them all.

We had a property we were interested in, which was well above our budget, was a really nice place. We met the agent who gave us an indication of price but told us the vendor was very very motivated, that they needed to sell a couple of the 8 sets of houses on this land to complete the rest of the build and was prepared to look at any offer. We decided on our offer, the agent said we would need to up it somewhat, we thought about it and declined asked them to present it. More pressure, we upped it by a smallish amount. She said she was confident, talked it up etc. offer came back countersigned 400K more than our offer and 300K more than we had been told the buyer wanted. Complete waste of our time. We lodged an official complaint with the manager of the branch who was even worse to deal with. I told him to shove his estate agency up his bottom and said they would be hearing from the REANZ people. 15 Minutes later a panicked regional manager calls back and asks for a meeting. Brings around a huge gift basket and all but begs on knees we don't the matter further, that the vendor had lied to them not that they had misrepresented the sale price to us. We told the regional manager we wouldn't take it further but he should leave immediately, remove us from any form of contact. We swore we would never deal with Ray White again.

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