Auction Sales vs Private Treaty
Why are properties sold at Auction?
Sometimes, a property will be put to auction if the real estate agent does not have a pricing strategy due to the uniqueness of the property, or the absence of comparable sales. In most instances however, properties that are sold under the hammer at Auction are sold in competitive markets. The objective of the auction is to pit buyers against one another. These buyers will have fallen in love with the property and are then made to compete with other potential buyers who have also fallen in love with the property. At the end of the day, the auction is a competition, and the winner is the buyer who pays the most money for the property.
Buying At Auction
Of course, sometimes buying at auction can be unavoidable. If the property that you have fallen in love with is being sold under the hammer, you may have no choice. If you are going to purchase at auction then there are a few things that you will need to ensure that you have done before the auction days arrives:-
Ensure your finance is approved - Having your finance unconditionally approved prior to the auction will enable you to bid with confidence. It will also go some measure to ensure that you stick to your budget and don’t pay more than you can.
Do your due diligence enquiries - Make sure that you have done all of your due diligence enquiries before the day of the auction. You may want to do a pest report and a building report to ascertain the condition of the property before the action.
Get the Contract checked - Take the Contract to your local First State Conveyancer to make sure that there are no issues with the Contract. They will explain the auction process to you and ensure that you know what happens before, during and after the auction. There is no room to negotiate the terms of the Contract after the auction so having the contract checked by your trusted First State Conveyancer is vitally important.
Be 100% sure - Once the hammer falls at the auction, you are committed to the Contract. Unlike private treaty sales, in an auction sale there is no cooling off period. Changing your mind after an auction will have very serious financial implications.
Buying through Private Treaty
As with any competitive venture, buying at auction can be stressful. Buying through Private Treaty, although still stressful, can involve significantly less pressure and stress than you would encounter than if purchasing at auction. This is due to the fact that:-
You have a bit more time - Time to negotiate, time to do due diligence enquiries, time to have the contract checked by your friendly First State Conveyancer and time to make sure that you want to be 100% committed to the Contract and purchase.
You may have a cooling off period - Unlike auction sales, in a private treaty sale, you may still have a cooling off period. This will enable you to cancel the Contract and obtain a refund of most of your deposit.
When thinking about buying your new property, either through Private Treaty or at auction, make sure you talk to First State Conveyancing.