Methods of sale
Depending on their personal circumstances and the state of the property market, a vendor (the seller) can choose to offer their property for sale in a number of different ways. These are the most common.
Auction: This is where all the buyers gather together to bid against each other. The vendor will set a reserve price (the minimum price they are willing to accept for the sale of the property), and buyers take turns to offer increasing amounts of money to the auctioneer. Whoever offers the highest amount becomes the successful purchaser, as long as their bid meets or exceeds the reserve price. When you buy at auction, you are purchasing the property unconditionally, so you need to make sure you’ve done all your due diligence beforehand. This includes:
- Registering your interest with the agent
- Agreeing on any changes to deposit amounts or settlement date
- Having the title checked by a solicitor
- Getting your finance fully approved
- Checking the LIM report
- Getting the building inspected and/or valued
- Ensuring you have your 10% deposit ready.
Set Asking Price: This is where a property is marketed at a fixed price. This doesn’t necessarily mean you need to offer that amount, though. The vendor could be asking more or less than the property’s true value, so there may be room for negotiation. If you offer below the asking price, the real estate agent will liaise with the buyer to see if you can reach a value that both parties are happy with. A vendor may receive several offers of differing value and agree to the one that has the best combination of price and conditions.
Tender: When a property is sold by tender, buyers are required to submit a written offer by a specified date, and the vendor will choose which one they want to accept. Make sure you get your tender documents checked by a lawyer, as they are legally binding and can’t be changed once submitted. You can choose to add conditions to your tender, but this may make your offer less attractive than that of another buyer.
By negotiation: A property that is marketed by negotiation may be advertised with no guide price, or with a broad price band. Buyers are invited to present offers at the value they believe the property is worth, including any relevant conditions, and the estate agent will then manage negotiations with the vendor until a purchase price is agreed upon. This is also known as a private treaty sale.
The sale and purchase agreement
Every property transaction requires the completion of a sale and purchase agreement. This is a document that sets out all the rules of the sale, including the agreed price and any conditions that need to be met by the parties involved. It’s legally binding, so once all the conditions have been fulfilled and you go unconditional, you’re committed to purchasing the property.