Methods of purchase

The great majority of properties are sold by two popular methods - private treaty and auction.

Private treaty In a private treaty sale, both with or without a publicised price, you make an offer through an agent to the seller and, if necessary, a negotiation occurs until you and the seller reach agreement.

At this crucial time, it is important to know that the agent is working for the seller to get the highest price possible.

As a buyer, you will either accept the predetermined price or, more likely, start by making a lower offer. The agent will handle the negotiations which will be aimed at raising the offered amount to the seller's predetermined price or, possibly, higher if more than one buyer is interested.

Auction A sale at an auction occurs in one of three ways:

• Before the auction itself, if the seller accepts an offer.
• On auction day, at the 'fall of the hammer' to the highest bidder.
• After the auction, if bidding does not reach the seller's minimum or 'reserve' price and the seller accepts an offer during the post auction agency period.

In the case of the first two scenarios, the buyer is required to sign the contract on the spot and pay the 10% deposit, which will go into the agent's trust account. The seller's contract must be accepted as written and there is no cooling off period (NSW, VIC, SA, QLD). In the third case, some of the terms and conditions of the contract may be negotiated depending on the buyer's requirements. These are very important differences to a sale by private treaty.

In the first and second instance, the sale has now been made, so it is crucial that you consider the following when buying at auction:

Be sure you:

• Register to bid. Most States now require the registration of bidders before a bid can be accepted. This includes a requirement for photo identification at time of auction. Check with your Ray White agent for details.
• Are certain that the property and its locality is right for you.
• Have had your loan formally approved and are able to pay the 10% in an agreed manner, by bank or personal cheque or deposit bond (where acceptable).
• Set your upper price limit and rigidly stick to it. If necessary, get someone else to bid for you.
Remember, you are bidding for the property not to win against another bidder. There is always another property.
• Know exactly what is and is not for sale with the property and whether any immediate renovations are required.
• Have had any necessary building or pest inspections carried out.
• Discuss the contract beforehand with your legal adviser and accept the terms and conditions.

More Information purchasing property

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