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Auction vs private sale
Determine whether buying at auction or via private sale is right for you
When making decisions about buying your new property, one very important thing you will need to consider is if you plan to buy at an auction or via a private sale. There are pros and cons involved with each option. The following guide will help you weigh up which option may be best for you. Whether you decide to buy at auction, off the plan, or through a private sale, we can help you find the home loan that’s right for you.
Buying at auction
If you find a home you like and it is to be sold at auction, the first thing to do is try to establish what price the property is likely to will go for. Keep in mind that often the sale price can vary quite a lot from what is anticipated. You can get an idea from advertisements of other properties for sale in the area, or from real estate agents' listing of recent sales. Before you bid at auction, it is important that you are clear on all details and have completed any necessary inspections and searches. Once your bid is accepted, you are obliged to purchase the property - there is no "cooling off" period.
Buying privately
There are two types of private sale: either through an agent or directly from the seller. In either instance, you make an offer but until contracts are exchanged, the owner can sell to someone else.
The table below sets out a simple comparison between auction and private sale to help you decide which is better for you.
| Buying at Auction | Buying through Private Sale |
| There is no "cooling off" period should you change your mind | A "cooling off" period may apply (varies from State to State) |
| You must normally pay the full deposit immediately if you are the successful bidder | You must pay the full deposit when exchanging contracts |
| All reports and inspections on the property must be done before bidding, with no guarantee of a successful bid | You can complete all reports and inspections before the end of the "cooling off" period (if there is one) - and withdraw your offer if anything is wrong |
| You are unaware of the reserve price (i.e. the minimum amount the seller will accept) until that amount has been reached | You are aware of the asking price |
| Competition from bidders could inflate the price | A higher price can result if a number of people are interested and make offers |
| The offer at auction is subject to the vendor’s contract terms | You may be able to negotiate some of the terms of the contract |
Buying off the plan
This means you purchase a home, typically a unit, before it is complete - sometimes even before construction has begun. You decide to buy after seeing the plans, rather than actually inspecting the (finished) property. Buying off the plan can mean buying at today's prices, but not actually paying until months later, by which time the value of the property may have changed depending on market conditions.
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