Buying at auction vs. private sale

When making decisions about buying your new property, you'll need to consider buying at an auction versus buying at a private sale. Both ways of buying a property require some special skills.

Buying at auction

If you find a home you love and it's going to be sold at auction, the first thing to do is try to establish the potential selling price. Keep in mind that often the sale price can be significantly higher than what the marketing says. Vendors may quote a low price to get a range of buyers interested in the auction.

You can get an idea from advertisements of other properties for sale in the area, or from real estate agents' listing of recent sales. You can also check out the RP Data Report, which gives you independent property information.

Check before you bid

Before you bid at auction, it's important that you've completed any necessary inspections and searches. Once your bid is accepted, you're obliged to purchase the property - there is no "cooling off" period.

Buying privately

There are two types of private sale: either through an agent or directly from the seller. In either instance, you make an offer but until contracts are exchanged, the owner can sell to someone else.

Buying at Auction	Buying through Private Sale
There is no "cooling off" period if you change your mind	A "cooling off" period may apply (varies from State to State)
You normally pay the full deposit immediately if you are the successful bidder	You must pay the full deposit when exchanging contracts
All reports and inspections on the property must be done before bidding, with no guarantee of a successful bid	You can complete all reports and inspections before the end of the "cooling off" period (if there is one) - and withdraw your offer if anything is wrong. Penalty applies.
You are unaware of the reserve price (i.e. the minimum amount the seller will accept) until that amount has been reached	You are aware of the asking price
Competition from bidders could inflate the price	A higher price can result if a number of people are interested and make offers
The offer at auction is subject to the vendor’s contract terms	You may be able to negotiate some of the terms of the contract

Buying off the plan

This means you purchase a home, typically a unit, before it is complete – sometimes even before construction has begun. You decide to buy after seeing the plans, rather than actually inspecting the (finished) property. Buying off the plan can mean buying at today's prices, but not actually paying until months later, by which time the value of the property may have changed depending on market conditions.

Talk to us about buying a home

If you'd like to talk about your options, our home loan experts are available on 13 13 76 or you can drop by a BankSA branch.