Unfortunately, you don’t have any control over whether a property you are interested in is up for sale via auction or private treaty, so it’s best you know the key differences.
So what are the differences between buying at auction vs. private treaty?
We’ve outlined the key differences below:
Buying at Auction
An auction is a sale held at a certain place, time and date, after a marketing campaign. A licensed real estate agent runs the auction and sells once a reserve price is reached. Auctions are governed by strict rules and regulations, which are different in each state and territory
- You must register as a bidder prior to the auction.
- Knowing your maximum bid is just one part of being prepared. Knowing how much each extra bid will cost you in weekly repayments can help you make the tough decision of whether to keep bidding or not.
- At an auction there is no cooling-off period, the property is sold when the hammer falls.
- Building and pest inspections must be completed before the auction.
- If you are worried about getting too emotional in the auction process you can make someone bid on your behalf, with your instructions to purchase.
- Ensure you know the conditions of the sale before you bid so you know when the property would settle.
- If the property is passed in and you’re the highest bidder you’ll have the opportunity to exclusively negotiate with the vendor.
- If you’re the successful bidder at an auction, you’ll have to sign the sale contract and a 10% deposit on the spot.
Buying via Private Treaty
A private treaty is when a property is listed for sale through an agent, with an asking price attached. The property is marketed and potential buyers make offers to the agent, who presents them to the seller, who decides whether to accept or not.
- You can take your time negotiating the purchase price of the property
- You can negotiate certain terms and conditions of the sale (e.g. subject to building inspection, cooling-off period, ect.)
- Once you’ve agreed on a price to purchase the property there is a cooling-off period. The time frame depends on the state you live in.
- You can negotiate on the initial deposit you put down, usually between 5-10% of the purchase price of the property, with the remainder due on settlement.
- You can delay getting inspections and reports done on the property until after you’ve agreed on a price.
Purchasing a property at auction or by private treaty will depend on your own personal circumstances, regardless of the option you choose (or are presented with), making sure you are in the best position to navigate house price negotiations with ease can also be a great idea!
Interested in more tips and information like this? Visit Rise High Tv for more!