Understanding Auctions and Private Treaties
When you’re ready to make an offer on a property, there are two common purchasing methods in Australia: auction and private treaty. Each has its own advantages, and understanding the differences will help you choose the best approach for your situation.
Buying at Auction
Purchasing a property at auction is often fast-paced and competitive, with potential buyers bidding against each other. The atmosphere can be exciting, but it’s important to be well-prepared to avoid overbidding:
Set a Maximum Bid: Before the auction, determine the highest amount you are willing to bid. Keep in mind how each additional bid may impact your mortgage repayments.
No Cooling-Off Period: Once the hammer falls, the sale is final, and there is no cooling-off period. If you are the successful bidder, you’ll need to sign the contract and pay a 10% deposit on the spot.
Know the Conditions of Sale: Make sure you understand the terms of the sale, including settlement dates and any special conditions, before placing a bid.
Bid with Confidence: If the property is passed in, meaning it doesn’t meet the seller’s reserve price, the highest bidder usually has the first opportunity to negotiate with the vendor.
Get Professional Help: If you feel nervous about bidding, consider appointing someone to bid on your behalf according to your instructions.
Buying at auction can offer certainty—you’ll know immediately whether you’ve secured the property—but it also requires quick decisions, so preparation is key.
Buying Through Private Treaty
A private treaty sale offers a more relaxed process, allowing buyers to negotiate directly with the seller at their own pace. This method can take days or even weeks, but it allows for more flexibility in terms of conditions:
Take Your Time: Unlike auctions, you can take your time to make an offer, consider your position, and negotiate the terms.
Negotiate Conditions: Private treaty sales often allow for negotiation on aspects such as the price, settlement period, and repairs to the property.
Cooling-Off Period: Once your offer has been accepted, a cooling-off period applies (the length depends on your state), allowing you time to conduct inspections or reconsider the purchase.
Professional Advice: You’ll still need legal representation (a solicitor or conveyancer) to help manage the process, including conducting due diligence and preparing for settlement
Many buyers prefer private treaty for the slower pace and opportunity to negotiate, making it feel like a less emotional process compared to an auction.
