Picture this: you’re strolling down a sunny street, past those cheeky terrace houses, or weaving through laneways with their hidden coffee havens. And then, bam! There it is, the house of your dreams, winking at you from across the street. Now, the question on your lips: How do you snag this beauty? Do you dive into the ridiculous world of auctions, where emotions run high and wallets empty quickly, or do you take a chill stroll down the private sale path, negotiating like a pro and sipping on cold, hard facts? Learn about how auctions and private sales differ, and find out which option is best for you.
Auction Vs Private Sale: What’s The Difference?
The key differences between an auction and a private sale are:Auction | Private sale |
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Auction has a fixed time limit for the sale of the property. If you’re the successful bidder, you will sign and exchange contracts on the auction date, soon followed by settlement on a later date. | A private sale may not have a fixed time limit for the sale of the property. As a first-home buyer, you may find this way of buying a house time-consuming, bureaucratic and frustrating. |
Once signed and exchanged, the contract of sale is legally binding and enforceable. It means you cannot withdraw from the purchase for any reason if you win at auction. There is no such thing as a cooling-off period or a finance clause. | Private sales offer a cooling-off period, usually five days, after the exchange of the contract, which allows you as a buyer to withdraw from the purchase for any reason. The cooling-off period may also be slightly longer in certain cases. |
Auction takes place in public and offers less privacy for both parties involved. | Private sale occurs between a seller and a buyer through private negotiation, offering much privacy. |
Auction creates a sense of urgency in buyers’ minds, which makes them more competitive and emotional. That, in turn, leads to fuzzy thinking and reckless decisions at auction. | Private sale allows you all the time in the world to go through every step of the homebuying process carefully. That is quite important for most first-home buyers. |
Competition fuelled by high property demand can easily drive the property auction price up. | The property price may rise or decline depending on the broader market trends and the number of offers they receive. |
An auction has a reserve price, which is the minimum price that the seller will accept. It is not subject to any negotiation with the buyer. | Private sale has an asking price, which is the ideal price that the seller will accept for the property. It is subject to negotiation with the buyer. |
A successful auction for a seller generally requires a good, expensive marketing campaign. | A modest marketing campaign may suffice for a private sale. |