…When an Underbidder Becomes the Winner!

In the final fortnight to Christmas, Amy bid on an A-grade property for two very special clients of ours. We’d hoped we could secure the property prior to auction, but with the market-shortage of great 2BR boutique, renovated apartments in our targeted locales, we found ourselves not only facing a strong number of competing buyers, but two other buyer’s advocates also.

This was no surprise….

A good A-grade unit will always attract other professionals and this is the sole reason why we place so much emphasis on briefing local agents and identifying pre-market and off-market opportunities. A quiet listing with a vendor who is motivated and who is familiar with current market values can make the difference between buying at fair market value versus paying a premium. And in all auction bidding exercises, we always conduct our due diligence to calculate anticipated rental yield, reasonable selling range for the market climate, and comparable sales analysis.

While we may wish to look as though we have endless budgets when we bid at auction, our job is to buy well – and this often means that we let a property go to a buyer who is prepared to pay above the range we have deemed is fair market value.

In this instance we’d identified this fabulously presented, wonderfully orientated two bedroom unit and despite not having a balcony, it scored highly enough to be our shortlisted property for our capital growth buyers. Located within easy walk to shops and station and being in a boutique block of six meant that our clients could have enjoyed a healthy land to asset ratio, a strong line up of professional tenants, and a solid 4.15% anticipated rental return.

Amy’s strategic bidding took us to our clients’ pre-determined ‘stretch’ limit. We were the underbidders. We’d prepared for this moment and our lovely buyers (who were interstate at the time) took the glum news well and were circumspect about the fact that this one just wasn’t meant to be. The winning bidder – another buyer’s advocate – was quick to plaster her ‘BOUGHT BY….’ sticker under the sold sticker, and Amy called me to tell me the news as the others started their celebrations.

They had indeed scored themselves a fantastic property.

The very next day I received a call from the listing agent. He’d identified another seller in the block – and this time the unit had not only a balcony but also a storage room on title. The additional clear bonus for our clients was that the apartment was already tenanted by a couple who loved the unit and wished to stay on with a fixed lease arrangement. The only catch was that the unit was not available for inspection for a while. We had to be patient and ride the Christmas shut down…. and that we did.

Our inspections were fast and our due diligence all measured up.

Our buyers pounced at the opportunity and we secured the unit for $438,000; a figure nearly $10,000 lower than the auction winning bid.

Sometimes, purchases are just not meant to be. We often find that something better is just around the corner. In this case, patience, great agent communication and standing firm paid off. Well done to our first-time investors!