Methods of Sale
Most properties purchased in Western Australia are by private treaty. Private treaty is when you buy through a real estate agent and the offers are not disclosed as in an auction. The agent or owner are trying to ‘sell’ the property, and in the case of the agent is duty-bound and legally represents the seller of the property. As such the agent will emphasise its benefits and is not required to call out its faults.
The seller’s real estate agent may advise the buyer on the property’s status, and they are obliged to disclose any ‘material fact’ about a property before contract signing, when it comes to buying a property and taking out a loan the person representing the buyer is you? So, DO NOT be rushed, pushed and when it comes to signing a contract, you may be asked by the seller or their agent to state in the contract that you were not persuaded to sign as a result of anything you were told about the property. So take your time, ask questions, and do not hesitate to ask to look at the property for a second or third time. When you are being shown through properties, take notes and reflect on those notes in your own time, compare properties and use a Homebuyer’s Checklist to help you.
Set date sale
A sale by set date is when buyers are given a deadline (usually around four weeks) to submit offers to the selling agent. Once the specified deadline is closed, all offers will be shown to the vendor, who will then choose whether to accept one of the offers or negotiate further on an offer, or put the property back on the market.
Auctions are uncommon in Western Australia but a good idea to understand the basics such as the reserve price. A reserve price is the lowest amount the seller is prepared to accept for the property. The reserve price, however, is not made available to the purchasers. An auctioneer or agent is not bound to accept the highest bid, if this is below the reserve price, or accept any bid until the fall of the hammer.
Things to be aware of
- You need to have your finance formally approved before attending the auction because at the fall of the hammer you are legally bound to purchase the property.
- Make sure you understand what is included in the sale. All fittings to be excluded should be clearly listed.
- You should have a pre-purchase property inspection and a pest inspection to ensure the property is structurally sound and free of pests.
- You should arrange for a strata records inspection if purchasing a unit.
- Auction can create buyer competitive tension so know your finance limit, remain calm and bid for the property not against another bidder. There is no cooling-off period.
- The auctioneer must announce the seller’s bid when it is made.
- You may be able to establish a realistic estimate value by analysing recent sales information but you may wish to have a valuation done on the property if you are unsure of an appropriate price for the area.
- Make sure you have a copy of the contract and any certificates and have had your solicitor or legal representative check the terms and conditions before auction.
- Remain disengaged and consider using an independent buyer, an experienced friend or a buyer agent.