Understanding the Different Methods of Buying Real Estate
There are a few methods for purchasing property in Australia that you should be aware of which we outline below. While the processes may seem a little daunting, know that your local Better Homes and Gardens® Real Estate team is there to guide you.
The four main methods of sale in Australia are private treaty, auction, tender and expressions of interest. Each state has different regulations and laws, so you should check with a real estate professional if you are unsure about the specific rules in your state.
Also known as a ‘private sale’, this selling method gives both the buyer and seller the most flexibility to negotiate price and purchase conditions.
Prospective buyers make offers on the property while the property is listed for sale on the market. Private treaty sales mean you have the option of attempting to negotiate the price or other selling conditions with the owner’s agent.
There is no ‘deadline’ to a private treaty sale, but be aware that properties in high-demand areas can sell quickly – so if you are interested in a property you should make enquiries with the Better Homes and Gardens Real Estate agent who has listed the property for sale.
If the owner has accepted your offer, there is a cooling off period, during which you should perform any due-diligence on the property, such as securing home loan finance and having pest/structural inspections done.
When buying at auction being prepared and planning a strategy are both essential for a successful outcome. Do your homework on the property, ensure you are comfortable with the bidding process and set yourself a limit. It is also advisable that you meet with the selling agent leading up to auction day to discuss any further details.
In some areas, auctions are the most popular method of sale. Depending on market conditions and local demand, you may be able to secure a property at a fair price with less competition from other bidders.
You will need to register to bid on (or before) the auction day to participate as a bidder. You can also make pre-auction offers to the owner through their agent. Whether or not your offer is acceptable to the owner will depend on a variety of factors – so it will help to do your research about how competitive the local property market is.
Most sellers will set a reserve price for the auction – the lowest price that they are willing to accept for the property. If no bids are made at or over this reserve price, the property may be passed in. In the event that a property is passed in, you may have an opportunity to negotiate a sale with the owner.
Some contracts of sale allow part of the deposit to be paid at the end of the auction, with the balance payable on a specific date. Always check the contract of sale before you bid to ensure that you have the necessary funds to secure a property before you bid.
Unlike private treaty sales, properties sold by auction have no cooling-off period, and you cannot negotiate the conditions of sale. That means you need to complete any due diligence inspections prior to auction day and have your finance pre-approved and your deposit ready for auction day. We recommend you keep in touch with the selling agent to ensure you are kept fully informed throughout the auction campaign.
Tender and expression of interest
These methods of sale are less common, and are usually associated with high-end or unique properties. Both require that you make a single written offer that is submitted to the owner by their agent for consideration.
- You must submit a proposal in response to the seller’s disclosed tender price, usually before a set deadline.
- You will be competing against other buyers by submitting offers, but you will not know how much others are offering, making the process similar to a silent auction.
- Properties are usually sold to the highest bidder.
Expression of interest
- You must send an expression of interest (usually a document) before the specified deadline.
- The property price is not always advertised.
- As with tenders, properties are usually sold to the buyer making the highest offer.