Pre-Auction offers in South Africa
Theauctioneer.co.za has been asked if you can make a pre-auction offer and what this means. Pre-auction offers are bids that are made before the auction begins. This means that bidders are able to place their highest offer of bid prior to the auction. In most cases the auctioneer will hold this bid price as an opening bid or target bid. In some small cases, the auctioneer will cancel the auction if the pre-auction offer has been accepted.
1. An offer follows the same principle as a bid. This means that the offer needs to be unconditional and readily available.
Auctions have a period before the auction where interested buyers can carry out their due diligence investigations. This includes viewings of the lots and talking to the agents concerning the lots. Therefore the price placed is unconditional. Should you be the highest offer, legally you will need to buy the lot.
2. An offer will usually not be accepted before the auction has closed
Should a pre-auction offer be placed, the auction will most likely still go ahead. An offer is seen as a bid in this case and if the offer is acceptable, this will usually be used as a opening bid on the day of auction. The auction will still need to take place to allow fairness for all prospective purchasers. In some cases no further bidding occurs and the hammer goes down. In other cases, the pre-auction offer is beaten on the day of auction. Pre-Auction offers should be viewed as you maximum bid in these cases.
3. If the pre-auction offer is not accepted, this does not mean that the property won’t sell at the offered price.
Many pre-auction offers are not accepted by the buyer as they are hoping that on auction day, the bids will be higher. The only reason why the offer was not accepted was to continue with the planned marketing campaign in the hopes of reaching more potential buyers and therefore increasing the potential bid price.
Therefore when it comes to South African auctions, Pre-Offer’s are seen as the bidders highest or maxiumum bid and the sellers opening bid.