Buying property by private sale
After months of house hunting, you’ve found a place that ticks the boxes. The house is on the market for a price that’s within your budget, and the real estate agent tells you that the owner is accepting offers. You’ve saved up your house deposit and got your finances lined up, so the only question is how much you’re planning to offer on the house. This process is known as a sale by private treaty, but how does it work, and what do you need to know when buying property by private sale?
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What is a private treaty sale?
A private treaty sale is one in which a property is offered for sale by the owner, either at a set price, with a guide price or an invitation for offers above a certain amount. Prospective buyers can make offers, and the property will then be purchased by negotiation between the seller and the successful buyer, typically with the aid of a real estate agent.
Auction vs private treaty
There are several key differences between a private treaty sale and an auction. When a house is sold by auction, the seller will typically set a reserve price, which is the minimum amount they will accept. On auction day, bidders will then compete (sometimes waving paddles) until the property is either passed in or purchased by the highest bidder.
By contrast, when a home is sold by private treaty, the seller will typically advertise an asking price, and buyers will then make offers. The process is not as transparent as an auction, and while the seller or their agent may comment on the general range of offers that have been received, you will not know exactly what other rival buyers have offered.
How to buy a home privately
Making an offer for the property
There are various ways to make an offer on a home for sale by private treaty. Depending on the agent and the seller, you may be required to submit an expression of interest form, put your offer in the form of an email, fill out a form supplied by the seller or even complete a contract of sale.
Irrespective of the format, your offer will typically include:
- the full name and address of the buyers
- the price you are prepared to pay for the property
- the deposit you plan to pay (typically up to 10%)
- details of your conveyancer or solicitor (if you have one)
- a proposed settlement date
- any conditions to complete your offer, such as time required to get finance or a building and pest report.
Once offers have been received for a property, some sellers will negotiate; however, in a competitive market, some agents may ask you to make your ‘best’ or highest bid right away. This may happen if the seller anticipates multiple offers and plans to decide on one quickly.
What is a conditional vs unconditional offer?
A conditional offer is one where the sale of the property will only become final if certain conditions are met – for example, you may decide to make your offer on a house conditional on a building and pest report, a due diligence check, or obtaining financing (for which you may require 14 to 21 days). The contract to buy the house only becomes unconditional once these requirements are met.
By contrast, an unconditional offer is one in which the buyer indicates they are willing to purchase the property immediately once the offer is accepted, with no such conditions attached. If you have pre-approved finance, and the seller has provided a building and pest report that you are satisfied with, you may choose to make an unconditional offer.
Contract of sale
A contract of sale for a house when purchased by private treaty will typically include:
- the full names and addresses of the sellers and buyers
- the address of the property
- the deposit amount and due date
- the sale price of the house
- the date of the property settlement
- any other conditions, including those related to fittings and fixtures in the house or additional inspections to be carried out by the buyer
- whether the property is a ‘vacant possession’, meaning empty; or subject to a lease, meaning it may currently be tenanted.
How long does it take to buy a house from a private seller?
In today’s competitive market, when a house is listed for private sale, offers can be made very quickly – it is not unheard of for offers to be made on the day of the first inspection, and for a house to be under conditional offer on the same day. Depending on the house and the owner’s motivation to sell, however, it can take longer. Once your offer is in and has been accepted, a settlement period will typically be anywhere from one to three months.
How long does settlement usually take?
The settlement date is the date on which ownership of a new property passes to you. It is the date on which the formalities of the property purchase are complete and the transfer of funds from the seller to the buyer is finalised. Settlement periods typically range from 30 to 90 days; however, you may opt for a shorter settlement period if you are confident that your finances are in order.
Private treaty specifics by state
When purchasing a home by private treaty, one of the most important things to keep in mind is the cooling-off period that is available to you. The cooling off period is the time during which the buyer of a house is allowed to withdraw from the sale after contracts have been signed, and it differs state by state. If you are planning on buying a home by private treaty, it is important to understand the rules in your state or territory.
Private treaty sale in NSW
In NSW, a buyer is entitled to a cooling-off period of five business days and may have to forfeit 0.25% of the purchase price to the seller. Further advice is available via the NSW State Government, including info on the requirements for a contract of sale in the state.
Private treaty sale in VIC
In Victoria, a buyer is entitled to a cooling-off period of three business days, and a full refund of their deposit, less $100 or 0.20% of the purchase price, whichever is greater. Further advice is available via Consumer Affairs Victoria, including info on the requirements for a contract of sale in Victoria.
Private treaty sale in QLD
In Queensland, a buyer is entitled to a cooling off period of five business days, and a seller may deduct a penalty of 0.25% of the purchase price if they withdraw. Further advice is available via the QLD State Government, including info on the requirements for a contract of sale in the state.
Private treaty sale in SA
In South Australia, a buyer is entitled to a cooling-off period of two business days. They are also entitled to a full refund of any deposit paid greater than $100. Further information is available via the SA State Government, including requirements for a contract of sale.
Private treaty sale in WA
In Western Australia, there is no legally mandated cooling-off period, which means you will only have one if you ask your conveyancer or solicitor to draft one into the contract and both parties agree. Further information is available via the Real Estate Institute of Western Australia (REIWA). The state government offers more info on the requirements for a contract of sale in WA.
Private treaty sale in ACT
In the ACT, a buyer is entitled to a cooling-off period of five business days, and the seller is entitled to 0.25% of the purchase price if a buyer pulls out of a contract. Further information is available via the ACT Government.
Private treaty sale in TAS
In Tasmania, there is no legally mandated cooling-off period, which means you will only have one if you ask your conveyancer or solicitor to draft one into the contract and both parties agree. Further information is available via the Real Estate Institute of Tasmania (REIT), while the requirements for a contract of sale in Tasmania are outlined by the state government there.
Private treaty sale in NT
In the Northern Territory, buyers are entitled to a cooling-off period of four business days, and can cancel the contract without incurring a penalty. Further information is available via the NT Government, including info on the requirements for a contract of sale in the NT.
About Alasdair Duncan – Senior Finance Journalist at Canstar
Alasdair has more than 15 years of experience as a journalist, and he specialises in home loans and lifestyle topics for Canstar. He has a Bachelor of Laws (Honours) from the University of Queensland and has lectured at QUT. His work has appeared in outlets including Pedestrian.TV, the ABC and Junkee.
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