Residential properties in Australia are sold either by auction or a private treaty sale.
While auctions get all the attention, most residential properties are sold through private treaty. This method may be quieter but it is more flexible. So, if you’re considering selling and want more control over the process, a private treaty might be the better fit.
In this article, we’ll walk you through the private treaty process, what you should be expecting, and the key advantages to keep in mind.
What Is A Private Treaty Sale?
A private treaty sale is when someone wants to sell their house and picks a price they think is fair. They usually figure this out by checking what other houses are selling for and talking to a real-estate agent.
Once the price is set, the seller’s real-estate agent advertises the property usually online on sites like realestate.com.au or Domain. The listing includes the asking price (or a price guide), photos, a description of the home, and key details like how many bedrooms and bathrooms there are.
The agent might also use a “For Sale” sign out front, social media posts, local newspapers, or email alerts to attract potential buyers.Then, the seller’s agent talks to people who want to buy the house and they try to agree on a price. If the buyer and seller agree on a price, the buyer pays a deposit to show they’re serious.
After that, there’s usually a short period called a cooling-off period, during which the buyer can still change their mind and not buy the house without losing most of their deposit.
Depending on which part of Australia they’re in, however, they may still lose a small portion of their deposit. If they back out after the cooling-off period, they will lose their deposit.
How Does A Private Treaty Sale Process Work?
- With a private treaty, the seller or vendor first sets a price range for the property when they list it for sale on the market.
- The marketing for sale begins. This may include dressing up the property for pictures, paying for paid listings on real-estate websites and newspapers, and arranging open houses for inspection by potential buyers.
- Prospective buyers are then free to make their offers through the real-estate agent or directly to the owner and negotiate on the price and terms of the sale, common requests from buyers include a subject-to-finance clause and a building inspection clause.
- Sellers are free to consider offers from as many prospective buyers as they wish, and keep the property on the market for as long as they want, unlike at auctions, which have a set date.
- Once the owner accepts an offer, a contract of sale is written, signed and exchanged.
- Next, a deposit will need to be made, after which the cooling-off period begins. During the cooling-off period, a purchaser can choose to withdraw from the contract for any reason. In New South Wales, this period usually is five days.
- Most buyers do a final inspection prior to settlement to ensure that everything is in order and in line with the contract of sale. The settlement is finalised.
Auction vs Private Treaty Sale
A vendor (seller) almost always wants the best price for their home or property. If there is great interest in the property, an auction is their best bet for getting the best price. But the seller may also have other considerations. The vendor may want a fast sale, perhaps because of divorce or because they’ve already had their own offer to purchase a property accepted elsewhere. These are factors beyond price that affect a vendor’s willingness to negotiate.
There are downsides to auctions as well. They usually require an expensive advertising campaign. Then there’s the uncertainty of the final auction price. Finally, by their very nature, auctions are a public affair and many vendors prefer to keep their sale private. If you’re interested in learning more about auctions and what buyers need to be aware of participating in them, we have a Home Buyers Course that covers this topic in great detail, including two real-life case studies.
Auction Vs Private Treaty Sale
| Feature | Auction | Private Treaty Sale |
|---|---|---|
| Pricing Approach | Reserve price set (often low to attract interest); final price determined by bids. | Guide price / asking price set; open to negotiation. |
| Legal Commitment | Bids are legally binding once the reserve is met and auction concludes. | Offers are non-binding until contracts are signed. |
| Timeline | Fixed timeline; contracts signed immediately, typically closes within 4 weeks. | Flexible; can take weeks to months to complete. |
| Buyer Pool | May exclude risk-averse buyers due to legal and financial commitments upfront | Appeals to a wider market, especially first-time or cautious buyers. |
| Conveyancing process | Legal documents available before auction; buyer commits at sale. | Starts after sale is agreed upon; subject to delays and buyer pull-out. |
| Best For | Sellers needing certainty and speed; for example banks, owners of distressed properties. | Sellers wanting top price and flexibility, not in a rush. |
Rules For Private Treaty Sales By State
When you buy a home through a private treaty, different rules apply, depending on where in Australia you live, especially when it comes to the cooling-off period.
This is a short time after signing the contract when the buyer can still change their mind and cancel the deal. But if they do, they might still have to pay a small fee and how this works depends on the state or territory.
Here’s a quick and easy guide to what happens in each state and territory:
- New South Wales (NSW): You have 5 business days to decide. If you cancel, you might lose 0.25% of the home’s price.
- Victoria: You get 3 business days to cool off after signing. If you back out, you could lose 0.2% of the price.
- Queensland: You get 5 business days. Cancelling costs 0.25% of the home price.
- South Australia: You get 2 business days after signing or after getting the seller’s information sheet, whichever comes later. If you cancel, you get your deposit back, except for $100.
- Western Australia: No cooling-off period here, so once you sign, you’re locked in.
- Australian Capital Territory (ACT): You get 5 business days. Cancelling may cost you 0.25% of the price.
- Northern Territory: You get 4 business days and there is no fee if you change your mind.
- Tasmania: There’s no cooling-off period. Once you sign, you are locked in.
5 Tips When Buying A House By A Private Treaty Sale
Learn to Negotiate
Never offer your max budget upfront. Start lower and increase slowly. The asking price is just a guide. In most cases, it is negotiable.
Research Everything
You should always check recent sales nearby to find out if you are getting a fair price. Also ask why they are moving. Even a small chat with the neighbours can give you some useful insights.
Set Clear Conditions
Include clauses like subject-to-finance or repairs in your offer. But keep conditions minimal. Sellers may reject offers with too many strings attached.
Stay Emotion-Free
Don’t get too attached. Emotion clouds judgement and weakens your bargaining power. Be ready to walk away to stay in control.
Do Your Homework
Inspect the property, review legal details, and check for pests or damage. Research helps you avoid overpaying for a home that’s not worth it.
Mistake To Avoid When Buying With A Private Treaty Sale
When buyers find a home they love, many rush to make an offer. Some call us almost breathless with desperation. But here’s the problem: Most don’t have a pre-approval in place.
Banks, especially the big ones, get slammed with applications. Even strong borrowers can face delays. On top of that, lender rules can change overnight, without warning. So, that dream home? You may no longer even qualify. Or worse, you get approved, but for way less than you expected.
That’s why getting pre-approved before you start house hunting is crucial.
Final Words
If you’ve done your research, can negotiate, and stay level-headed, buying through a private treaty sale is a smart move. It gives you time to think, set your terms, and avoid an auction’s pressure. But before you make an offer, get your home loan pre-approved. It gives you confidence, speeds up the process, and shows sellers you’re serious.
Speak with one of our specialist mortgage brokers today. Call us on 1300 889 743 or fill out our online enquiry form and we’ll help you buy with confidence.