When it comes to the buying process, there are a few different ways to purchase a property, however the two most common ways of property purchase is either by private treaty (for sale) or by auction.
Let’s look at for sale by private treaty first.
Private treaty is relatively simple.
A price or price guide is usually placed on the property to give the price or indication of price that the owner is looking to sell for.
The property usually sits on the market until it has been sold.
Now, for properties going up for sale by auction.
Auctions generally have a reserve price.
A reserve price is the lowest amount the vendor (owner/seller) is prepared to accept.
If a property goes to auction and ‘passes in’, this means it didn’t break the reserve.
When an auction reserve wasn’t met, the highest bidder usually gets the first option to negotiate with the owner through the owner’s selling agent to try and secure the purchase of the property for a price the vendor will accept.
Tip – If you’re interested in a property that is scheduled for auction, you can make the selling agent an offer to try and purchase the property prior to the auction.
Some important things to be aware of when looking to purchase either by private treaty or auction.
Ideally, you would want to have completed all your checks if you’re serious about purchasing. Things like having building and pest inspection reports done, and strata reports for apartments, will help you understand and know what you’re buying into.
Check, read and review the contract yourself and with anyone you’ll be purchasing with so you all understand clearly what is included in the sale of the property along with the terms and conditions of the contract. Have your solicitor or legal representative also check, read and review the contract.
Make sure you have your finances organised and loan approval officially and formally approved before making any offers or attending auctions.
Important things you should be aware of when properties are sold by way of auction.
The vendor is entitled to one bid known as a ‘vendor’s bid’. It’s usually made by the auctioneer who will announce immediately before, or in the process of making the bid, that they are making a vendor bid.
There is no cooling off period for properties sold at auction or on the day of auction. On a separate note, when it comes to private treaty, unless you’ve waived your right to a cooling off period by way of a 66W certificate, there is usually a five business day cooling off period for properties sold by private treaty.
Competitive bidding can become tense and stressful. Remember, you’re there to hopefully win the bidding for the property and not to beat another bidder. Only bid for the property and do not bid above your approved limit.
If you’re the successful highest bidder at the end of the auction, you will be legally obliged to sign and exchange contracts as well as pay the deposit (usually 10% of the purchase price) on the spot.
Lastly, remember that only one person will end up as the successful purchaser. If it wasn’t you, be prepared to accept that sometimes you may have incurred some costs like solicitor or licensed conveyancer fee’s as well as reports and inspection fees during the process.
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This information is of a general nature only and does not take into account your objectives, financial situation or needs. We are not financial, legal or tax advisers. You should seek appropriate professional advice specific to you before acting on this information.
