Purchasing a home may be a difficult and daunting process, especially if it’s your first one. Understanding your options, nevertheless, may aid in toning down the stress. The two most common ways to purchase your first house are through auctions or private agreements. Before choosing which way to go, it’s important to understand the benefits and drawbacks of each option.

Going the auction route

In Australia, especially in bigger cities like Sydney and Melbourne, auctions are a popular way to sell real estate. In bidding, auctioneers offer properties that interested buyers compete to buy. This process creates a sense of urgency and competition among buyers, potentially resulting in a quick sale at a fair market price.

Depending on the state, the bidding procedure varies. For instance, a bidder must register before the auction in New South Wales, the ACT, Queensland, the Northern Territory, and South Australia. You must provide a photo ID to the seller’s agent in order to place a bid. If an agent will handle it for you, they must register by giving their license number. Before the auction begins, you will get a bidder identifier. West Australian states of Victoria and Tasmania, none of this is necessary. On the day of the auction, you can simply show up.

You must first view any property in which you are interested. Obtain the sale contract, then review it. Get a bank pre-approval so you know your bidding limit. At the bidding, once you place the highest bid, you will pay the deposit and sign the contract right away.

Pros of Auctions:

Urgency and competition

The fast-paced and competitive environment of an auction can drive up the price of the property and result in a quick sale.

Clear process

The auction process is transparent and straightforward, with all bidders bidding in real time.

Market price

Auctions often result in a sale at a fair market price, as bidders compete for the property.

Cons of Auctions:

Intimidation

For some buyers, the fast-paced and competitive environment of an auction can be intimidating.

No negotiations

Auctions do not allow for negotiations or contingencies in the sales contract, meaning the sale is final.

Overpaying

Buyers may end up paying more than they originally intended, as they get caught up in the excitement of the bidding process.

Going the private treaty route

Private treaties, also known as private sales, are a more relaxed method of buying a property in Australia. In a private treaty sale, the seller sets a price for the property and potential buyers make offers. This process allows for negotiations and the opportunity to include contingencies in the sales contract.

To do this, you have to obtain a contract of sale from the seller and have it reviewed by a solicitor. Then, you have to organize the building and strata reports. You have to get pre-approval from a bank for a mortgage, after which, you can make a verbal offer for the home. The final step is negotiating the sale price with the agent or seller. 

Pros of Private Treaties

Relaxed process

Private treaty sales are a more relaxed process, allowing buyers to make a considered decision about the property.

Negotiations

Private treaty sales allow for negotiations, giving buyers the opportunity to agree on terms and conditions that suit both parties.

Contingencies

Private treaty sales offer the opportunity to include contingencies in the sales contract, such as building inspections or finance approval.

Cons of Private Treaties

Slower process

Private treaty sales can take longer to finalize, and vendors and buyers need to address negotiations and contingencies.

Less competition

Private treaty sales may result in less competition among buyers, potentially resulting in a lower sale price.

In conclusion, the method of buying your home depends on your personal preferences and circumstances. If you’re comfortable with a fast-paced, competitive environment, an auction might be for you. On the other hand, if you prefer a more relaxed and negotiated process, a private treaty might be a better fit. Whichever method you choose, it’s important to do your research and work with a trusted real estate agent to ensure a successful transaction.

The method of buying isn’t the only thing you should carefully look into. A trusted mortgage broker is going to make your home-buying process easier. It starts with a home loan that matches your needs, offers a competitive rates along with other useful loan features, and expert home loan brokers. Let us make it easy for you. Contact us now for a non-obligation consultation. Let’s find the most suitable home loan for your needs.