There are a number of different methods you can use to purchase a property. The processes may seem a little daunting, but with the help of a real estate agent to guide you, you’ll be just fine.
In Australia there are four main types of selling methods auction, private treaty, tender and expressions of interest.
Each state has different regulations and laws you need to be aware of.
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 the properties 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.
Auctions are a very popular buying method in Australia, as there is a chance of snapping up a property quickly at a good price.
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.
In most instances 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 If the bids do not meet or exceed this price, the property may be passed in, or ‘withdrawn’.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.
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 bidder
Check with your agent to ensure you are familiar with what regulations your state has around the different ways to buy a property.