Buying

Buying Methods

Ultimate First Home Buyers Guide

Before you venture out in the field to find your dream home it is important to familiarise yourself with the various buying methods for purchasing property. This is because the method for which the property is being sold will impact the process you need to go through to acquire it.

Auction

What is it? A public sale of property where the highest bidder is normally the successful buyer.
Making an Offer: If a property is for sale via auction there are two ways you can make an offer. 
1. Before the auction.  You can make an offer prior to the auction. Keep in mind a property remains on the market while a vendor considers your offer. A vendor does not have to accept preauction offers, even generous ones, and may prefer to sell at auction.
2. At auction. If you are the highest bid at the fall of the hammer after the property was declared on the market you will purchase the property.
Negotiation: There is no negotiation if you are the highest bidder above the reserve price. However, if the property is passed in and you are the highest bidder you have the right to negotiate with the vendor.
Deposit: You must pay a deposit on the day following a successful bid.
Cooling-off Period: There is no cooling-off period for residential properties sold at auction.

Private sale/Treaty

What is it? A private sale has no specified closing date and is usually negotiated between a buyer and vendor with the assistance of an agent or legal representative.
Making an Offer: The offer is made via the agent. The vendor does not have to accept your offer, as they may wish to wait to see what other offers are made on the property.
Negotiation: There is either an asking price or an indicative range in which the owner will consider offers. As a buyer you can negotiate with the vendor to make the sale subject to certain conditions; however the seller does not have to agree to your terms.
Deposit: If your offer is accepted you will be required to pay a deposit, if you have not already done so.If the vendor is not using an agent the deposit must be paid to their legal representative and held in their trust account.
Cooling-off Period: Refer to the below table. 

Expression of Interest

What is it? An expression of interest is similar to a private sale/treaty however a formal written offer must be submitted for the property by a specific date.
Making an Offer: The offer is made via the agent; however, you will be required to fill in an ‘expression of interest’ document by a certain date.
Negotiation: As a buyer you can negotiate with the vendor to make the sale subject to certain conditions; however the vendor does not have to agree to your terms.
Deposit: If your offer is accepted you will be required to pay a deposit, if you have not already done so.If the vendor is not using an agent the deposit must be paid to their legal representative and held in their trust account.
Cooling-off Period: Refer to the below table. 

Tender

What is it? A tender is a very formal sale process, which requires potential buyers to submit a proposal in response to the request to the owner’s advertised tender. Given the complexity of this process, it is usually only reserved for premium properties in the residential sector.
Making an Offer: Your proposal to the owner’s advertised tender is your offer. This detailed document may include price, interest rates and terms. Because of the complexity of this process each party would have an agent and legal representative to help complete the tender for submission.
Negotiation: Commonly there will be an initial meeting between the vendor and yourself to discuss terms and negotiate before you submit the final tender document
Deposit: The owners advertised tender will disclose if there is also a required deposit. In most cases there is also a cost to submit the tender.
Cooling-off Period: The cooling-off period depends on the tenders’ terms. Each tender will have completely different terms set out. So each transaction needs to be treated differently
VIC WA QLD TAS

Victorians who buy residential property are legally entitled to a cooling-off period of three clear business days.

A cooling-off period for a contract for sale of land does not apply.**

Queenslanders who buy residential property are legally entitled to a cooling-off period of five clear business days.***

A cooling-off period for a contract of sale of land does not apply in Tasmania.

SA NT ACT NSW

When purchasing residential property in South Australia a cooling-off period of two clear business days applies for a contract of sale of land.****

In the Northern Territory a cooling-off period of four clear business days applies and only from the day after the legal representative / conveyance receives the contract.

A cooling-off period of five clear working days applies to residential properties sold in the Australian Capital Territory. *****

When purchasing a residential property in New South Wales the cooling-off period starts at the time the sale of contract is made and concludes at 5.00pm on the fifth day after the contract was made.******

Buyers tip: If you are not confident negotiating with the agent, you may prefer to engage a Buyer’s agent or other professional to do the bargaining for you. You can find out more about this by visiting the next page in this guide.

 

Buyers tip: The best way to learn how an auction works is to go to as many auctions as possible. Go to a couple of auctions on properties that you’re not intending to buy. Observe the process and the way the auctioneer runs the show. Take note of the strategies employed by those who are successful.

Notes:

*Victoria – There are exceptions to this rule. For more information, consult the Sale of Land Act 1962 (Section 31) or Consumer Affairs Victoria.

**Western Australia – There are exceptions to this rule. Under the Retirement Village Act a cooling-off period only applies to a contract of sale of land located within a retirement village.

***Queensland – There are exceptions to this rule. For more information, consult the Property Agents and Motor Dealers Act 2000 (PAMDA).

****South Australia – There are exceptions to this rule. For more information, consult the Office of Consumer and Business Affairs.

***** Australian Capital Territory – The cooling-off period does not apply in the following cases:

– The property was purchased on the same day as a public auction at which the property was passed in.
– The buyer waives the cooling-off rights after having received independent advice from a solicitor
– A corporation- The property was sold at auction or by tender

******New South Wales – There are exceptions to this rule. For more information, consult with your solicitor.