Different Ways to Buy a Property
Understanding your options is important
There are Four Main Selling Methods
There are a number of different methods available to buy a home in Australia. Some buyers may choose to snap up a property at auction, while others prefer to gauge the market through a tender or expression of interest.
Here is an overview of the four main types of selling methods: Auction, private treaty, tender and expressions of interest.
Also known as a ‘private sale’, this selling method requires the vendor (or seller) to set a price from the start of their campaign.
This enables them to receive and consider offers from prospective buyers throughout the time the property is listed for sale on the market. Through this method of sale, the owner can choose to extend their campaign.
As a prospective buyer, you can submit an offer through your real estate agent to the owner and potentially negotiate the price. Once the offer has been accepted by the owner, there is a cooling off period. This is where certain conditions must be met in order for the sale to go through, such as obtaining finance or a sound home inspection.
Pros and Cons of buying by Private Treaty
- Can be less stressful, as you have time to think about decisions and submit offers
- You can negotiate terms and conditions with the seller
- You will know the asking price for the property, giving you a good idea of what to offer
- Can be competitive and the agent doesn't always have to tell you the exact competing offer amount
- May be a longer time frame due to contract exchange and settlement
- aThe property is not 100 per cent sold once the seller accepts your offer
Auctions are a very popular buying method in Australia, as there is a chance of snapping up a property quickly at a good
Before the auction day, you can make a pre-auction offer to the owner through the real estate agent. This is where you can
submit an offer of how much you are willing to pay for the home. However, in order for your offer to be successful, it needs to be an amount that will attract the owner’s attention.
You will need to register your bid on the auction day to begin bidding on the property.
The owner will have set a minimum reserve price they are willing to accept for the property. If the bids do not meet or exceed this price, the property may be passed in, or ‘withdrawn'.
Should this happen, there could be an opportunity for you to negotiate a sale with the owner.
Some sellers allow part of the deposit to be paid at the end of the auction with the rest on a specific date. This will need to be identified in the contract.
Properties sold by auction are not subject to any conditions, which means you will need to complete an inspection prior to auction day and have your deposit cheque ready to go at the time of sale.
Unlike private treaties, auctions do not have a cooling off period. This means you need to be sure this is the property you want to buy.
Pros and Cons of buying by Auction
- Usually a fast transaction, and sales are unconditional
- No back and forth negotiating between seller and buyer
- You might be able to submit a pre-auction offer to the seller before auction day
- Can be stressful due to competition from other bidders
- Sales are unconditional, so you need to have appropriate finance
- Fierce competition may lead to you paying more for the home
Tender and Expression of Interest
These two selling methods are quite similar to private treaty, but they are usually associated with premium properties. They are more formal and both require written offers passed through the agent to the owner.
Expression of interest
- You must send an ‘expression of interest’ document to be sent in by a specific date
- The property price is not always advertised
- Buyers need to submit a formal proposal as a response to the seller’s tender price
- Buyers compete against one another by submitting offers, but neither party knows how much others are offering, similar to a silent auction
- Properties are usually sold to the highest bid
Pros and Cons of Tender and Expression of Interest
- You can submit conditions to the seller in your offer (unlike auctions)
- There is no set reserve price - it's solely the seller's decision
- Your offer will be submitted privately, so others won't know what you have submitted
- You will need a deposit when you submit a formal offer to the seller
- You won't know how much other buyers have submitted as offers are confidential
- There is not an asking price advertised for the home