Before you venture out in the field to find your dream home it is important to familiarise yourself with the various ways to buy property. This is because the method for which the property is being sold will impact the process you need to go through to acquire it.
What is it? A public sale of property where the highest bidder is normally the successful buyer.
Making an Offer: If a property is for sale via auction there are two ways you can make an offer:
- Before the auction. You can make an offer prior to the auction. Keep in mind a property remains on the market while a vendor considers your offer. A vendor does not have to accept preauction offers, even generous ones, and may prefer to sell at auction.
- At auction. If you are the highest bid at the fall of the hammer after the property was declared on the market you will purchase the property.
Negotiation: There is no negotiation if you are the highest bidder above the reserve price. However, if the property is passed in and you are the highest bidder you have the right to negotiate with the vendor.
Deposit: The successful bidder must pay a deposit on the day following a successful bid.
Cooling-off Period: There is no cooling-off period for residential properties sold at auction.
Private sale/ Private Treaty
What is it? A private sale has no specified closing date and is usually negotiated between a buyer and vendor with the assistance of an agent or legal representative.
Making an Offer: The offer is made via the agent. The vendor does not have to accept your offer, as they may wish to wait to see what other offers are made on the property.
Negotiation: There is either an asking price or an indicative range in which the owner will consider offers. As a buyer you can negotiate with the vendor to make the sale subject to certain conditions; however the seller does not have to agree to your terms.
Deposit: If your offer is accepted you will be required to pay a deposit, if you have not already done so.If the vendor is not using an agent the deposit must be paid to their legal representative and held in their trust account.
Cooling-off Period: Refer to the below table.
Expression of Interest (EOI)
What is it? An expression of interest is similar to a private sale/treaty however a formal written offer must be submitted for the property by a specific date.
Making an Offer: The offer is made via the agent; however, you will be required to fill in an ‘expression of interest’ document by a certain date.
Negotiation: As a buyer you can negotiate with the vendor to make the sale subject to certain conditions; however the vendor does not have to agree to your terms.
Deposit: If your offer is accepted you will be required to pay a deposit, if you have not already done so. If the vendor is not using an agent the deposit must be paid to their legal representative and held in their trust account.
Cooling-off Period: Five business days following the signing of the Contract of Sale.
What is it? A tender is a very formal sale process, which requires potential buyers to submit a proposal in response to the request to the owner’s advertised tender. Given the complexity of this process, it is usually only reserved for premium properties in the residential sector.
Making an Offer: Your proposal to the owner’s advertised tender is your offer. This detailed document may include price, interest rates and terms. Because of the complexity of this process each party would have an agent and legal representative to help complete the tender for submission.
Negotiation: Commonly there will be an initial meeting between the vendor and yourself to discuss terms and negotiate before you submit the final tender document
Deposit: The owners advertised tender will disclose if there is also a required deposit. In most cases there is also a cost to submit the tender.
Cooling-off Period: The cooling-off period depends on the tenders’ terms. Each tender will have completely different terms set out. So each transaction needs to be treated differently