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A guide to property auctions and private sales across Australia

By ,| 3 min read

When it comes to buying a property at an auction or through a private sale, it’s important to be aware of the different processes and requirements.

Australian buying and selling legislation varies depending on the state or territory you’re in, so as a prospective buyer, you need to be aware of how these variations will impact you.

Here we break down the process for auctions and private treaty sales, noting any differences that apply in each state and territory.

How do auctions work?

1. Conduct plenty of research

Auction sales require a different approach to buying property than private sales, meaning it's important you do lots of research beforehand. Get to know the area you want to buy in - real estate agents can help with this by giving you an idea of local auction results and trends.

Once you've found a property you'd like to bid for at auction, you should do property condition research, including gaining access to a building report, pest inspection and reviewing any other relevant documents.

2. Consider a pre-auction bid

If you really want to be in with a solid chance of getting the property you want, you can make a pre-auction bid in writing. However, not all vendors will accept pre-auction offers so be sure to check before you do so.

To make a pre-auction offer, you must have the contract and deposit ready to go.

3. Register with the seller's agent

Most states and territories in Australia require that you pre-register for the auction, however Victoria, Western Australia and Victoria are exceptions to this.

Often, you'll have to provide personal identification when you register to bid, and you'll then be allocated a bidding number.

4. Place your bid

This element of the auction is the same across most states and territories. Before anyone starts bidding, the seller will set a reserve price in writing - this is the minimum sale price they'll accept for the property.

Once the auctioneer has called for an opening bid, the bidding starts. When the seller accepts an offer from the highest bidder, the auction process is complete.

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5. Sign the contract and pay the deposit

If you are successful in your bid for the property, you are expected to sign the contract of sale and provide the deposit (usually 10% of the sale price) as soon as the auction terminates.

The sale is then completed on settlement day, when the buyer pays the remainder of the purchase price, and both transfer and title documents have been completed and exchanged.

6. Be aware of the cooling off period

It's important to know that there is no cooling off period for property purchases made at an auction anywhere in Australia. That's why you need to make sure you definitely want the property and your finances are in order to follow through with the sale.

How do private sales work?

1. Make an offer

If you've found a property you want to buy and have carried out relevant inspection and condition reports, had the property valued and have checked your financial eligibility to pay for the property’s value, it's time for you to make a formal offer to the agent or direct to the seller.

This can be verbally, by filling out a form or by completing a contract of sale provided by the agent selling the property. If you make a verbal or written offer, it will be consolidated into a contract of sale.

2. Exchange contracts and pay the deposit

This part is pretty straightforward, and is similar across different states and territories.

Both you and the seller will sign contracts and exchange them to confirm the sale, and this means legally, your deposit has to be paid. Like auctions, the deposit is typically 10% of the purchase price.

However, in Western Australia, payment of the deposit is only required at this point if it has been included in the contract of sale.

3. Be aware of the cooling off period

The cooling off period after a private property sale differs across Australia. This is the period when you can withdraw your offer for a property, however you may have to forfeit a percentage of the purchase price if you do so. This varies between states and territories, but is typically 0.25% of the purchase price.

In New South Wales, the ACT and Queensland, the cooling off period is 5 business days. In the Northern Territory it's 4 days, in Victoria it's 3 days, and in South Australia it's 2 days.

In Western Australia, you can negotiate a cooling off period into the contract if you wish, and in Tasmania there is no cooling off period at all.

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4. Reach settlement

The amount of time from the signing of contract until settlement will vary, but is usually around 6 weeks. Settlement means you are officially the legal owner of the property.

The property becomes legally yours upon settlement when all relevant checks have been made, both transfer and title documents exchanged and most importantly, the full purchase price paid.

It’s important to remember that regardless of what state or territory you are in, dummy bidding is illegal. This is when you bid at an auction without the intent to actually buy the property.

At the end of the day, whether you buy a property at an auction or through a private sale, it’s vital to know what the rules and processes are and to be aware of how they vary depending on the state or territory you are purchasing in.

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Tags: auction, private sale, private treaty sale, new south wales, tasmania, south australia, northern territory, western australia, australian capital territory, victoria, queensland, new purchase, new home, first home buyer

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