Auction vs private sale: where should you buy?

Understanding your buying options

Most homes in Australia are sold either at auction or through a private sale. Each method has its own process, timeline and requirements. That’s why knowing the basics of how auctions and private sales work is important, as it can help you prepare for what to expect as you start your property search.

Buying your home at an auction

Auctions are public events where interested buyers gather, either in person or online, and place bids on a property. The auctioneer manages the bidding, and the property is sold to the highest bidder, if the final bid meets or exceeds the seller’s reserve price. Here are a few things to keep in mind:

• The house sale in an auction is unconditional. So, if you’re the winning bidder, you’ll need to sign the contract and pay a deposit right away.
• There’s no cooling-off period, so you can’t change your mind after the auction is over. That’s why you need to have your finances organised before auction day.
• Getting a home loan pre-approval is essential to ensure you know exactly how much you can spend and don't get caught out on auction day
• The auction process is usually fast and competitive. All bids are made openly, so you can see what other buyers are offering. This can make the price go up quickly, and sometimes properties sell for more than expected.

Ideally, you should have inspected the property before the auction. In case you’re in the market to buy, we’ve put together a home inspection checklist to help you proceed with confidence.

Buying at a private sale

A private sale can be a more flexible way to buy a home. Instead of bidding in public, you make an offer to the seller, usually through their real estate agent. The seller is free to accept or reject it or come back with a counteroffer. This can involve some back and forth and take a few days or longer depending on how long negotiations go. Here are a few things to keep in mind:

• In a private sale, there may be a cooling-off period. This means, as the buyer, you have a short window of time to change your mind (if needed).
• The length of the cooling-off period can vary depending on your state or territory. This offers you time to review the terms or reconsider your finances.
• If you do make an offer, you can make it subject to finance and pest and building inspections.
• You can use this time to also explore loan options or speak with a banker.

Private sales can feel less pressured than auctions, however they do come with uncertainty. Still, for some buyers, the extra time and flexibility may make it a better fit.