A pre-auction offer is an offer to purchase a property submitted before the scheduled auction date. Vendors can accept, reject or counter a pre-auction offer. If accepted, the property is sold prior to auction and the auction is cancelled. Pre-auction offers are a legitimate strategy for buyers who want to avoid the competition and uncertainty of auction day — but they come with trade-offs.

When Does a Pre-Auction Offer Make Sense?

A pre-auction offer is worth considering when: you have strong comparable evidence that the property will sell above your budget at auction; you need the security of a cooling-off period or finance condition (which you cannot have at auction); the property has been on the market for several weeks and the vendor may be motivated to sell prior; or you are a first home buyer who cannot compete against investors and upsizers at auction.

What Price Should I Offer Pre-Auction?

Pre-auction offers need to be compelling enough for the vendor to cancel the auction — which means a price at or above what the vendor expects to achieve under the hammer. Agents will rarely recommend a vendor accept a pre-auction offer below the reserve. A strong pre-auction offer is typically 5-10% above the top of the agent’s price guide, with a short settlement period and minimal conditions.

What Are the Risks of a Pre-Auction Offer?

The main risk is overpaying — if you offer significantly above the likely auction price to secure the property early, you may leave money on the table. There is also the risk the vendor uses your offer to generate competition and drive up the price from other buyers. Always have your conveyancer review the contract before making a pre-auction offer.

Frequently Asked Questions

Can I include conditions in a pre-auction offer?

Yes — unlike at auction, a pre-auction offer can include finance and building inspection conditions. However, vendors are less likely to accept a conditional pre-auction offer unless the price is very compelling. Unconditional pre-auction offers (with finance already confirmed) are much more attractive to vendors.

What happens to my pre-auction offer if the vendor rejects it?

The vendor can reject your offer and proceed to auction. Your offer is not binding until the vendor signs the contract. If the vendor rejects your offer, you can still bid at auction.

Should I use a buyers advocate for a pre-auction offer?

Yes — a buyers advocate can assess whether a pre-auction strategy is appropriate, advise on the right price to offer, negotiate on your behalf and review the contract before you sign. Collings works with experienced buyers advocates across Melbourne and Sydney who specialise in pre-auction and off-market acquisitions.

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