Auction vs. Private Sale

[Slade]

Apart from the obvious, what are the differences between an Auction and a private sale in regards to making payment?

I read somewhere that you need to be able to pay for the property immediatley at an Auction, as opposed to having a settlement agreement..

Is that correct? What else is there to know when buying at an auction, does this also apply if the property passes in at auction, or is it then treated as a private sale?

[JamesGG]

Hiya,

Standard rules for an auction usually mean you've gotta hand over a cheque for 10% upon the fall of the hammer.

As with everything in real estate though, it is negotiable if you speak with the agent beforehand.

With a private sale, you don't have to put anything down on the contract if you don't want to. The last property that I bought was by private sale. I paid $1,000 upon acceptance of the offer, and not a cent more until settlement.

I much prefer to buy through private sale than auction. Sales process is much easier to negotiate terms in; auction is much more price-orientated.

Cheers

James.

[Brendan]

As far as I am aware generally on auction day if the hammer falls in your favour you are the buyer and you can not get out of it, ie, there is NO cooling off period at all, that is a key difference of auction versus private sale.

If the hammer doesn't fall, the property is passed in and you negotiate privately after the auction but on the same day of the auction up until midnight, it is still deemed to be auction conditions, therefore there is still no cooling off period.

The contract will not be subject to finance or a pest and building inspection as it is generally considered that all these things will be arranged during the weeks leading up to the auction.

You must pay a deposit when you sign the contracts, usually this is negotiated prior to the auction . If you refuse to sign the contract the auctioneer has the power to sign the contract on your behalf.

Hope that helps

[Slade]

Thanks, thats great.

I put in an offer before an auction, and it was rejected and I was told to bid at Auction, although with those terms, not sure that I will.

[The Y-man]

Thanks, thats great.

I put in an offer before an auction, and it was rejected and I was told to bid at Auction, although with those terms, not sure that I will.

In Victoria, if you make a prior offer, and the offer is accepted within 3 days of an Auction, you are subject to the same conditions as a propoerty sold at auction: i.e. no cooling off, 10% deposit, unconditional (no "subject to inspection/finance" etc)

Cheers,

The Y-man