A property is advertised for a set period and a date set by which buyers must have completed their enquiries (legal, building/pest inspections), arranged their finance & be ready to bid. On the day of the auction, buyers compete, bidding in an upward direction until no higher bid is offered.
If the seller’s ‘Reserve Price’ is reached, the property will be declared ‘on the market’ by the auctioneer. The ‘Reserve Price’ is the lowest price the seller is willing to accept. If the ‘Reserve Price’ has been reached or exceeded, the property will immediately be sold to the highest bidder. If the ‘Reserve Price’ has not been reached, negotiations will commence with the highest bidder.
If the property has been sold, the highest bidder must exchange contracts and pay the deposit, which is 10% of the purchase price, immediately. There is no ‘Cooling Off Period’.
If you plan to bid at auction, it’s a good idea to have a ‘Deposit Bond’, which will act as a substitute for cash if you don’t have 10% deposit in cash or a cheque book
‘For Sale’ is the standard term for a Private Treaty sale. It usually has a fixed asking price although there can be slight variations. Sometimes, the seller will seek ‘offers above’ an indicated price. Interested parties make offers and negotiate with the seller through the agent. The agent may be negotiating with several parties at once and acts under the instruction of the seller. When you commence a negotiation, it’s important to be serious and respond quickly, fairly and decisively.
Be mindful that if you are reluctant to negotiate a fair offer, the owner may accept an offer from another party and sell to another party. The agent does not have to tell you what the other party’s offer is.
You will be required to pay a refundable holding deposit once your offer has been accepted. However, you must sign the contract to buy the property as quickly as possible. Until you do, even if a deposit has been paid, the seller retains the right to sell his/her home to anybody else they choose. If a higher offer comes along, they are free to accept (your deposit must be refunded, but the owner and agent are not obliged to refund any other costs).
Private Treaty sales are subject to a ‘Cooling Off Period’. The ‘Contract of Sale’ will explain how long this is – typically five business days