Buying by Tender

Do your homework!
Visit as many similar properties in the area as possible and ask the Agent for a list of recent local sales. This will help to give you an indication of the market value of different properties.  Don't just rely on the CV, as these can be all over the place and are not always a reliable guide. Generally the inner city suburb properties are selling for over the CV, however this need not always be true.

If you want to be really well-informed you can get an independent valuation. Some banks will require you to have one of these before they lend you any money, however, be warned that valuation is not an exact science and no two properties are exactly the same.  Go and look at other properties and see what they sell for. This will likely also improve your knowledge of market value.

Adjusting expectations
Once you have looked around, you may realise that you have to compromise on your wish list. If this is the case, remember there are many things you can change about a property (with the appropriate consents and some time/money) with the exception of changing its location. The catch-phrase ‘Location, location, location’ wasn’t coined for no reason!

Going in with an offer
The beauty with a tender is that you can make your offer conditional. However, you should have the tender document thoroughly checked first by your solicitor and the less conditions you have in the offer, the better your chances of owning the property. If you do decide to make your offer conditional, try to keep the timeframe during which the conditions must be met as short as possible. If you are flexible on things like settlement date you should make the agent aware so they can advise the vendor.

Picking the right price
At the end of the day, most vendors look at the price you are willing to pay for the property.  You may only have one opportunity to buy the property, so you should put your best offer in. Unlike an auction, you are ‘flying a bit blind’ in terms of price and there is the chance you could pay thousands of dollars more than the next highest offer. However, it’s worth considering that, if the property is a long-term purchase, the extra amount will pale into insignificance over time. 

The waiting game
It is common practice for your tender to remain open for acceptance for three to five days, so you may have a bit of a wait once you have put your offer in. Tenders are a popular mode for situations where the property is owned by a group of people, so they need to have time in which to deliberate over a decision.

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