Auctions get all the media attention but can often be stressful for both parties involved as many can get caught up in the emotion and overspend. So what are the benefits of buying a property through private sale?
Buying a property via private sale is often considered less stressful, especially for first home buyers.
The reason for this is because you usually have more time to speak with the real estate agent/vendor and negotiate the conditions. Auctions get all the media attention but can often be stressful for both parties involved. As competition heats upon the day between buyers, many can get caught up in the emotion and overspend.
So what are the benefits of buying a property through private sale?
You have more time
At auction, if you are the successful bidder, you exchange unconditionally on the spot. Most lenders will only conditionally approve the loan prior to auction and still need to do a valuation before they will formally approve the loan. You will need to pay for pest and building inspections prior to auction without even knowing if you are the successful bidder. Solicitors also need time to review the contract so you need to be organized. This all add to cost and risk when you purchase at auction.
Being away from the hype of auction day can allow you to approach the situation rationally and make the best decision for you. Most states have a cooling off period where you have a certain amount of time where you can change your mind. The cooling off period gives you time to get a range of things done. This includes the pest and building inspection completed, reviewing the loan contract by your solicitor time as well as getting unconditional loan approval. This reduces the risk that there are underlying problems with the property or you won’t be able to lend against the property.
Before making an offer, make sure you check the terms and conditions of the cooling off period as penalties may apply if you withdraw your offer.
The success of an auction often comes down to who turns up on the day to bid. It can often be intimidating to step up and bid against other experienced buyers.
Purchasing through a private sale gives you the opportunity to conduct your own research and make an offer in private. You get to deal directly with the real estate agent and negotiate with the seller directly. This stage can take days or weeks which gives you time to think it all through rationally.
Your don't have uncertainty about price
At an auction, the property price is unpredictable. A property could go well beyond its value if there are buyers determined to purchase it or could go for a bargain price if the vendor is keen to sell and sets a low minimum sell price.
With private sale you have a selling price which is a starting point for your research and negotiations. Although you may have time to negotiate, in a hot market there may be a number of keen buyers interested in the same property, it may mean you have to move quickly.
One of the best ways to be prepared when buying through private sale or auction is to be financially ready. It is extremely important to have a pre-approval. Often real estate agents will ask if you have pre approval to demonstrate to vendors that you are a serious buyer. Formal pre approval will also allow you to move ahead quickly once your offer is accepted as a lot of the paperwork has been completed. You can apply for formal pre approval with State Custodians online. Click here to access the Online Application.
To get a quick indication of whether the property you are looking at is affordable try the State Custodians Instant Online Pre-Approval. It only takes a few minutes and gives you an instant result on-screen and an email confirmation of the details - perfect for when you’re out and about.
At State Custodians, we understand how difficult it can be to purchase in a hot market. Our experienced Lending Specialists are on hand to guide you through the process and make the home loan process as easy as possible. You can then focus on finding your dream property. Give our friendly team a call today on 13 72 62 or leave your details here and they will contact you.