When deciding to put your property on the market, or if you're looking to buy, the two most common pathways are auction and private treaty (also known as a private sale).
Deciding between auction and private treaty involves various factors. Start by considering your timeline and market conditions. At auctions you’ll be bidding against other potential buyers, will have to make fast decisions and will generally know if you will own the home when the auction concludes. If you’re negotiating through a private treaty you’re negotiating the sale price with the vendor and the initial price is set by the market value of the property, not a price reserve. The process can take days or weeks longer than an auction.
Buying and selling at auction
The auction process is an energetic and transparent way to purchase or sell property, featuring a predetermined date and time where buyers compete by placing bids. An auctioneer leads the bidding, creating a lively atmosphere as the offers increase. The sale is finalised when bidding ceases, assuming the reserve price has been reached.
A major benefit of auctions is transparency. For buyers, you can see the competition and know exactly what other buyers are willing to pay. For sellers, you can feel confident that the final bid represents the true market value of your property.
Auctions require buyers to be prepared, as setting a maximum bid and understanding the property’s value are essential. Once the hammer falls, the sale is unconditional, meaning auction usually provides a smoother process.
"The biggest thing is the transparency that auction offers you as as both a buyer and a seller, but as a buyer you can choose whether you want to outbid somebody by a thousand dollars or by five hundred dollars and when when you eventually buy it you know that next person was a thousand dollars below you so you've paid market value." - John Morris, Chief Auctioneer
Remember these tips:
Knowing your maximum bid is just one part of being prepared. Knowing how much each extra bid will cost you in weekly repayments can help you make the tough decision of whether to keep bidding or not
When you buy at auction there is no cooling off period, the property is sold when the hammer falls
If you are worried about getting too emotional in the auction process you can make someone bid on your behalf, with your instructions to purchase
Ensure you know the conditions of the sale before you bid so you know when the property would settle,
If the property is passed in and you’re the highest bidder you’ll have the opportunity to exclusively negotiate with the vendor
If you're the successful bidder at an auction, you’ll have to sign the sale contract and typically a 10 per cent deposit on the spot.
