Ep. 88. Offer Before Auction or Wait? Why Playing It Safe Costs Sydney Buyers
I hear this all the time: buyers who want to skip auction altogether because they assume an offer before auction is the safer, cheaper move. It isn't always. Sometimes it's the move that costs you the most, especially in a softer market.
Buying property isn't like playing checkers, it's more like chess. Every property comes with its own vendor motivation, its own agent running the campaign a certain way, and a set of other buyers you can't always see. Before you decide whether to make an offer or head to auction, you need to build a picture of all three.
I also unpack the myth that an early offer keeps you out of a bidding war. In NSW, if your offer gets knocked back, the price guide has to move up to reflect it, which can tip your hand to every other buyer watching that property. Sometimes the smarter move is to let the auction happen and use the transparency of the room to your advantage.
Chapters
0:00 Why buyers want to skip auction altogether
0:49 Buying property is chess, not checkers
1:53 Why avoiding auction can work against you
3:03 Building the picture: the vendor's motivation
4:45 Building the picture: reading the agent's campaign
8:15 The myth that an early offer gets you a better price
9:50 How to tell if the competition is real
10:25 Why the transparency of an auction room works for you
11:45 Highest bidder: a courtesy, not a right
13:05 How an early offer can move the price guide
13:40 Early offers and unrealistic vendors
15:45 When an early offer does make sense: see episode 89
Listener FAQs
Does making an offer before auction get you a better price?
Not necessarily. Unless you're confident a deal can be done before auction and you understand why the vendor would take it, you're often paying a premium to avoid a bidding war. In a softer market, that bidding war may never have happened.
What happens to the price guide if my pre-auction offer is rejected?
In NSW, if you offer above the guide and it's knocked back, the guide has to move up. That tells every other buyer someone was prepared to pay that much, and it raises the floor you'll face at auction.
How do I know if there's real competition on a property?
Agents rarely tell you when they're flooded with interest, because they don't want to scare you off. The reverse tell is louder: if an agent is calling you several times a week asking for an offer, they probably don't have anyone else.
If I'm the highest bidder and it passes in, do I get to negotiate first?
It's a courtesy, not a legal right. The agent can still go back to the other parties. If you're serious, don't announce loudly that you're done, because that frees them up to do the deal with someone else.
When will an agent refuse to consider an offer before auction?
Often when the vendors can't agree among themselves. An acrimonious divorce or a deceased estate with several beneficiaries usually has to run to auction so the result plays out in front of everyone.
I'm an independent buyers agent based in Sydney, buy-side only, I never act for vendors. This is part one of a two-part conversation on offers and auctions, and part two is episode 89, When Should You Make an Offer Before Auction?
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Speakers in Today's Episode
Michelle May, Michelle May Buyers Agents
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Please note that any views or opinions presented in this podcast are solely those of the speakers, and do not necessarily represent those of any business. These views and opinions are general in nature, and do not take account of your personal objectives, financial situation and needs. Please consider whether it applies in your circumstances and seek professional advice wherever appropriate.
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The market doesn't care about you. Now I know this is a hard take but this is something I have to tell a lot of people who inquire with us all the time when they tell me that they don't want to go to auction because auction just drives up the price and therefore they think surely the smarter need to do is to make an offer. So today I wanted to dedicate an episode about this to show you when isn't the right time to move and when to skip making an offer prior to auction. Now if you're wondering who I am my name is Michelle May. This is the Buy Your Side podcast which is all about helping you make smarter property buying decisions. Welcome and let's get into it. So in this episode I want you to learn to understand why the instinct to avoid an auction can really backfire and how to work out whether you should be making an offer prior or just buy the bullet and go to auction. So buying property in my experience is not like playing checkers. It really is like playing chess and you really have to understand that there are so many different moving parts and those moving parts are different people with different motivations and drivers. You've got your agent, you've got your vendor and you've got the other buyers as well. And I think that a lot of people think that by making an offer prior, they're going to avoid a fight at auction. And I think that can sometimes be a bit of a myth. So let's talk about it. Why auctions are not always the enemy. And particularly we're talking now September, 2026, where there is a bit of a downward turn happening and why auction may definitely be the right way for you to go. When buyers come to me and they say, oh, I just want to avoid auctions. I just, I don't want to buy at auction. I think that walking in with that kind of mindset can be quite dangerous because you are just looking at it from your viewpoint. And I understand why people say auctions are high pressure environments and the agents sometimes go and walk around you like sharks and you can feel intimidated and lose your head a little bit.
Potentially maybe if you are up against specialists like me who do this all the time. But when you buy your property, you really, you have to think about it like playing chess, like I said before. And you really need to be three moves ahead before you can understand, okay, is this actually the right thing to do? And so without strategizing, I think that you could potentially end up overpaying by a ton. So where do you go from here? I've just obviously been theorizing, but what does that actually mean for you if you are in the situation where you go, okay, I hate auctions. Michelle, help me out.
So first of all, you need to start asking questions and building a picture about the situation. So one thing to understand is that every property will come with its own set of parameters, if you like. There's a different vendor. There is a different agent. There potentially will be a different group of buyers. it might even be a different market together because even within say one area of Sydney like the inner west different markets can be happening with even just adjoining suburbs if you like so once you understand that you need to take a step back and start asking questions because you need to start building that jigsaw puzzle right and you really shouldn't be moving making and move until you understand the shape of that jigsaw puzzle effectively. So the questions you should work through before anything else is understanding A, the adventurous motivation. So practically you can say, okay, have they bought elsewhere? Are they still living there? How long has it been on the market? Are they upsizing, downsizing? And sometimes you need to ask the agent the same questions in different ways just to see whether it gets a different answer firstly but if they if they maybe let more details lose because the more you let them speak the better it is for you to really understand as a are you getting all the facts are they getting all the facts raised because sometimes also the vendors don't necessarily tell the truth to agents right so I think most vendors want to downplay that if they are in a financial situation that they have to sell because they don't want to give the agent the impression that they just want to just get a quick deal done because they might leave money on the table. So build that picture from that end, but then also build the picture from the agent's end. So what are the comparable sales that you are showing me to build a picture on pricing? Obviously, it's not just motivation, it's pricing as well. Who are the other buyers interested at this stage and how much due diligence have they bought a building and past? Have they had the contract reviewed? And if the contract was reviewed, what changes were potentially asked and agreed to? So you're building a picture on who the other competitors, if you like, are. Now with the agent, it's important to understand, okay, so are they a deal doer and this is this is harder to ascertain if you're not constantly in the market like someone like me you know we really have certainly built pictures of agents through the years there's some agents that run everything to auction because they can't do a deal to save themselves and there's others that love to do a deal like the tuesday after that second saturday right? So you can certainly ask the agent, you know, what is your plan for this campaign?
And they may well tell you, well, I just want to have at least two Saturdays, you know, get some market feedback and go back to my vendor with that before we make any decisions. And that's quite understandable also because selling a property is super expensive. So the vendor will want value for money from this sales agent as well. I think a lot of vendors kind of resent having to pay a sales agent that percentage, right? And so they want them to work and see that they can extract as much as they can from the buyers out there, as much feedback, but also exposure. Marketing a property is not cheap. So if you're going to spend $10,000, $20,000 marketing a property and styling it, then at least the audience, i.e. the buyers out there, need to have had that time out there on the portals and websites to make sure that everybody sees it and gets a chance to come through it before they then sell it. So building a picture there, for example, the agent might come back to you and say, well, no, it's a divorce and it's an acrimonious divorce and therefore it has to run to auction.
So, okay, that's a very clear line in the sand going, okay, here or no further, wait to auction. And that can actually be true, right? Because not all relationships end harmoniously. And so therefore the only way for a house or an apartment to be sold is through that open forum. And you just be wasting your time putting an offer out there. Or it could be a deceased estate, for example. There are mom and dad or mom gone into a nursing home or passed away. And so there's three kids or seven grandchildren.
And I've mentioned before, once money gets involved, people get greedy and people have different expectations and people distrust each other. And so therefore, most agents then go, do you know what? I don't want to be involved in this headache. I'm going to get blamed by one or the other, if not all of them. So I'm going to run into auction, right? so that no one can disagree with what has actually happened right in front of their eyes. So that is what I'm talking about. You need to build the picture. You need to understand who are the stakeholders in this whole situation and where do I go from there.
I think the one thing I want to talk about is the huge myth that is out there that by making an offer prior, you're going to pay a better price. Because, you know, they're saying, well, look, I don't want to bid up against anybody and I don't want to have that bidding wall. And so therefore, I'm just going to make an offer. But actually, I'd argue back that unless you are very confident and know what you're doing and you're like 90% sure you're going to get a deal done prior to auction and there's reasons for paying, you quite often are paying a premium to avoid a fight. That facility in a market like this may never have happened in the first place. So are you overpaying potentially? I think maybe so. Yes. So you got to think about when the bar pool's not that deep, the bars are spread thin, so to speak. That bidding war that you thought was going to happen on the day may not actually happen at all. Right? So you're scared of the ghost of a 22 registered auction, that may never happen at all.
So offering early to feel safe and lock it in and to avoid that fight is actually not necessarily the smartest thing to do. So what you actually got to look out for is that, is it your fear playing into you or is that actually the best thing to do? So a certain, firstly, whether that competition actually exists, right? Because one thing that most agents will do is if there is a lot of competition, is downplay the competition. They have never in the history that I've been a buyer's agent for the last 18 years have said to me, oh, Michelle, yes, oh my gosh, this auction, I've been flooded. There's going to be 20 registered for this.
No, they're not going to say that because they don't want to scare you off. They want to entice you to come and put your hand up, right? But the reverse is also true. If an agent is all of a sudden calling you three times a week to make an offer, it's probably because he's got no one else. Right. So look at these different scenarios. Now, when it comes to auctions themselves, I think you've got to flip that fear of auctions actually into something that can work to your advantage. Because a lot of buyers fear auctions because they feel exposed and at risk of being pressured. But that exposure also works the other way. It actually gives you the gift of transparency. You can look the other buyers in the eye.
You can tell the agents to back off and not imagine other offers if that's what they're doing. And there's no mystery. The people in the room are the people in the room. And it could just be you with one other super nervous first home by a couple. And or it could be a couple more. But at least you know who they are and you can see them. And this is why I say also when you go to auction, make sure you are there at the registration table before the registration table opens. So you know exactly who's who in the zoo. Are people showing up at the bank of mom and dad?
Are they looking like downsizers, first home buyers like yourself or whatever situation you're in? But you can see exactly who's who and how many paddles have been taken. That also said is you can totally tell the agent to back off. Don't pressure me. Don't look at me. I'll bid when I did. You can say that in different variations, but they have to respect that. So they don't have to be in your ear, which is obviously they want to try and do that. You're not going to miss it for a thousand dollars. So tell them, no, I don't want you to speak to me. Take a notepad if you need or on your phone, take notes.
When the offers come in, take your time. And also, if you then are the highest bidder, you have the courtesy of to negotiate. the first shot at negotiating directly with the vendor to see whether you can come to an agreement. So that's personally why I love the transparency of an auction room. Now, going back to that negotiation, it's not a legal right. It's a courtesy, right? So it does happen that an agent will go back to all the other parties as well to see if there's another deal still to be had with the people who weren't necessarily the highest bidders so make sure that you are if you're genuinely interested you don't say loudly oh no but I'm done because then that gives them total freedom to go and talk to everybody else and don't be upset then if someone else does the deal instead so make sure that yeah you do know that it is only a courtesy. So what I would say that if you want to make an offer prior, right, could it actually hurt you as well? Like actually you don't get the deal done and then you still have to go to auction. Well, it can do because what it does is it moves the price guide, right?
So the guide on the property is a million dollars. You make an offer of a million and fifty. If that gets knocked back, the guide has to be moved up, right? That's the legal requirement here in New South Wales. So it's now gone up to a million at 50. So that alerts the other buyers that there is another interested party and they were prepared to put their hand in the pocket for this. So the floor is higher. You've shown your hand somewhat. And I don't know how much fat you've got between that offer that you made and what you can potentially take to auction.
The other thing is also that depending on when you make that offer, it can really work the wrong way with the vendor as well. Because sometimes it can make the vendor more unrealistic as to what is achievable. Some vendors have inflated expectations of what their property is worth. And I definitely think that is happening right now in this market. And so if you make an offer, certainly within that first two weeks, they might get that false burst of confidence going, well, someone already threw this offer at us. Let's see what else we can get at auction, right? And so sometimes the vendor really needs to have the auction happen, that deadline happen to see where the market actually is and not where, I guess, I suppose they wish that it was. And so an early offer can really take away that urgency for them to have to face the reality of this is what the market is telling us it's worth. So I think in many cases, an unrealistic vendor really only meets the market on auction day or in the weeks thereafter, because again, they also need that transparency because unfortunately, I mean, unfortunately, unfortunately selling agents are not always necessarily trusted by the vendors either.
So they might, if you throw an early offer at the agent, the vendor might think that there's an ulterior motive from the agent. So there's a lot of smoke and mirrors when it comes to that kind of thing. So the fact that you're throwing an offer at a vendor and they're not going to take it, you're actually sort of exposing yourself to the other buyers out there. And it's not really going to stick with the vendor either, unless you've laid that groundwork and understand, okay, this is where they're at psychologically. But also from a dollar point of view, it's got to be an offer where it puts them in that sort of unturity of, am I going to get this money at auction?
You don't want to overspend, but at the same time you don't want to underplay it, right? So think about that before you make an offer. So none of this obviously means you should never make an offer early. We make offers early all the time but I guess without understanding what you've got in front of you, you can't make that statement. I personally think saying I don't want to go to auction, I'm just going to do this. Well, you're only a cog in the whole property selling, purchasing machine. So therefore, you need to understand all the different parts of it. So I've been going on long enough. So I'm going to make a part two about this, understanding when is it the right time to make an offer early and what are the other things you need to think about.
But I hope this has helped you get the full picture first. And if you want some help with deciding what to do in your property purchasing project, get in touch. Always here to help you on a one-on-one basis. There is also the option to do the Better Home Buying Online course. And of course, a plethora of other episodes here to listen to. So remember, buying property is chess, not checkers. And hopefully this episode has helped you a little bit in understanding what I actually mean by that. Thanks for listening and until next time.