Before purchasing a property, it’s worthwhile knowing the differences between buying at an auction and buying through a private treaty.
Auctions:
- Depending on your state, there may not be a cooling off period if you’re the successful bidder
- You won’t know what the reserve price is until it’s been reached on auction day
- Depending on your state, you may have to pay the deposit straightaway if you win
- Pest/building inspections should be done before auction day to make sure the property is in a reasonable state.
- Property prices can jump up quickly if prospective buyers enter into a bidding war
Private treaty:
- You usually have a cooling off period where you can change your mind after your offer is accepted. Cooling off periods vary from state to state
- You pay the deposit when exchanging contracts
- Depending on your state, you may be able to carry out pest/building inspections during the cooling off period and withdraw your offer if anything is wrong (but you might have to pay a penalty)
- The price on the property may go up if other potential buyers put in higher offers