How To Buy A House Or Apartment? The Different Methods Explained
There are three keyways to buy a property in Australia:
- Private treaty / private sale
- Tender / expression of interest
Buying a house by private treaty / private sale
Private treaty (also called private sale) is when a home is for sale with a set price. This is the most common way people buy a home in Australia. Interested buyers make an offer to the agent, who in-turn presents the offer to the seller. The agent will negotiate individually with prospective buyers to achieve a sale as close to the seller’s price as possible.
Whilst it has a listing price, rarely does the property sell for this price. What normally happens is after a period of negotiation where offers pass back and forth between the seller and the buyer, they will come to a mutually agreeable price and the property will be sold.
Once both parties are happy, the Contracts of Sale are signed and a deposit of approximately 10% is made. This method normally offers a cooling off period, however some sellers request the buyer waive this as a condition of the contract being signed.
For more information about buying a property via private treaty/ private sale click here.
Buying a house or apartment at auction
An auction is a public sale by a licensed auctioneer where the property is sold to the highest bidder. The vendor will set a reserve price in consultation with their agent. This is the lowest amount they are prepared to accept for the property.
If the property reaches the reserve price, the property will be sold to the highest bidder. Contracts will be signed, and the buyer is expected to pay a deposit there and then. Importantly, there is no cooling off period when you buy via auction so all of your due diligence must be done prior to auction day.
If the bidding doesn’t reach the reserve, the property is ‘passed in’ and the agent will then begin negotiating with the highest bidder in an effort to achieve a price both parties are happy with.
Buying a house or apartment by expression of interest / tender
These methods of sale are fairly similar. They are essentially a type of closed silent auction. Buyers are invited to submit their best offers by a particular date and time. After the closing date, the seller and their real estate agent will review the submitted tenders and accept, reject or negotiate with buyers to achieve an outcome both the buyer and seller is happy with.
This method of sale has traditionally been more suited to high end or exclusive properties.
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