This method of buying property allows sellers and buyers to negotiate the final price. Properties are usually advertised with a price or price band and potential buyers can make an offer on the property. Offers can be unconditional or conditional:
- Unconditional offer:
The simplest form of negotiation. The buyer agrees with all of the terms set out in the contract.
- Conditional offer:
The buyer agrees to buy the property, but with one or more conditions that must be met first before the sale can go through. Getting a building inspection is a common example of the type of condition which can accompany a conditional offer.
Any offer, whether conditional or unconditional, must be made in writing (yep - it’s kind of old fashioned) in the form of an Agreement for Sale and Purchase which is a standard form usually prepared by the seller’s real estate agent or lawyer. If the seller is not happy with the offer, the seller can make a counter offer and negotiations can continue until both parties are happy with the agreed price.
An auction is a public process where potential buyers bid against each other to purchase a property. By publicly negotiating the price, buyers and sellers can see what the true market value of the property is.
Even seasoned property professionals can find auctions intimidating sometimes, but doing your research beforehand and knowing what to expect can make the whole process a bit less stressful.
While it might all sound a bit daunting, one of the benefits of buying a house at auction is that it can be quick and easy. An auction has a set date of sale and you generally bid on an unconditional basis so a house can be bought and sold at auction in minutes.
A tender is a way of buying property through private and confidential offers made by a set deadline. Offers need to be submitted in writing on a standard tender document, and handed in to the specified closing location by the tender deadline. Don’t worry, the real estate agent will usually provide all the documentation and help you with the process.
All tenders are opened at the same time (like presents at a 5 year old’s birthday party!). Vendors reserve the right to negotiate with any tenderer but if your tender is accepted you are legally bound by the terms and conditions of the tender document. It’s worthwhile getting your tender offer checked with your lawyer before you submit it – you don’t want any hidden surprises.
When a property is sold by deadline treaty or sale, it is marketed for a set period with a clear end date. Like the tender process, properties sold by deadline sales do not need to include an advertised price. Vendors can choose to accept an offer at any time and do not have to wait until the end date to agree on a deal.
Remember, the seller doesn’t have to accept the highest offer and can negotiate with anyone who puts in an offer – the seller might want a quick sale for example, and perhaps you can move in straight away, that might make your offer more attractive to the seller than a higher price offer with a longer settlement date.