Before purchasing a property, you will need to decide whether you wish to buy at auction or via private sale. Both require some knowledge of the process as well as specific negotiating skills.
Before purchasing a property, you will need to decide whether you wish to buy at auction or via private sale.
Both ways require some knowledge of the process as well as specific negotiating skills.
The more you understand about how each process works, the better chance you will have at being successful.
Buying at auction
If the property you wish to buy is going to auction, then you need to do as much research as you can before the day. It is important to get an idea on what the potential selling price will be to see whether this property will be within your budget. Remember that the actual selling price may be higher than the price that has been advertised. Vendors may use a lower price to attract buyers, but then on the day, bidders may bid well above that price. Some of the things to remember if you are going to buy at auction include:
• There is no ‘cooling off’ period if you are the successful bidder.
• You will normally have to pay the deposit straightaway if you win.
• Pest/building inspections should be completed before the auction day to ensure the property is in a reasonable state.
• You will not know what the reserve price is until that amount has been reached.
• Property prices often increase rapidly if buyers enter into a bidding war.
Buying via private sale
Buying a property via private sale is often considered less stressful, especially for first home buyers. The reason for this because you usually have more time to speak with the real estate agent/vendor and negotiate the conditions. Things to remember before buying a property privately include:
• You should have a ‘cooling off’ period where you can change your mind (will depend on the state).
• You are required to pay the deposit when exchanging contracts.
• You are able to complete pest/building inspections during the ‘cooling off’ period and if anything is wrong, you can withdraw your offer. However penalties may apply.
• If there are a number of potential buyers interested in the property, the price may go up.
Whether you decide to purchase via auction or private sale, it is important to organise a pre-approval beforehand to secure a home loan. Many buyers make the mistake of making an offer/bidding at auction without a pre-approval only to find out afterwards that they cannot get a home loan for the selling price. Take a look at our Instant Pre-approval tool that can provide you with an indicative pre-approval in minutes.