Auction vs Private Sale

When it comes to acquiring property in Victoria, two predominant methods of sale prevail: auctions and private sales. Let me elucidate the disparities between them, encompassing their respective advantages and drawbacks. It’s important to note that the choice of sale method rests with the agent/vendor, not the buyer.

Auctions can be exhilarating yet daunting. We’ve all witnessed those riveting bidding wars on television, where individuals fervently compete for their dream homes. However, auctions don’t invariably culminate in frenzied bidding. In fact, some properties may sell for less than anticipated or not receive any bids at all!

The pivotal point to grasp about auctions is that once you commit by signing the contract, you are committed. Therefore, meticulous due diligence is imperative. Prior to the auction, arrange for a building inspection, review the contract, secure your pre-approval (ensuring it’s thoroughly assessed), and be prepared to bid confidently. While these expenditures may be sunk costs if you do not emerge as the winning bidder, they are indispensable investments.

The most appealing aspect of auctions? Transparency! You can discern your competitors, and regulations are in place to ensure fairness, creating an equitable playing field for all parties. Auctions prioritize achieving the highest price for the property, and if you’ve conducted your due diligence, you can acquire the property without remorse.

On the other hand, private sales lack the predictability and standardized procedures characteristic of auctions. Each agent employs their distinct process, leading to a variable and uncertain experience. It can be likened to a game of “Guess the Offer” or “Let’s Make a Deal.” Questions may arise concerning the disclosure of competing offers, the potential for negotiation, and the presence of potentially misleading tactics.

However, a positive aspect in this scenario is that with a private sales, as they allow for certain conditions. For instance, you can make your offer subject to a building inspection or financial approval. However, bear in mind that an excess of conditions might weaken your offer, especially in a competitive market.

On the flip side, the drawback is you won’t have visibility into other buyers or their offers. It’s akin to playing poker with a blindfold. To navigate this labyrinth effectively and ensure you don’t miss out due to a lack of comprehension of the process, you must pose the right questions to the agent.

Therefore, the pivotal question arises: Auction or Private Sale? If I were compelled to make a choice, I would opt for auctions. They offer transparency and well-defined rules. Nevertheless, the prevalence of auctions versus private sales varies by location. Major cities and high-demand areas tend to favor auctions, while regional areas often lean toward private sales. Ultimately, you may not have a choice regarding the sale method you encounter, but remember that auctions aren’t always a chaotic roller coaster ride. If it’s the right home for you, they should not be dismissed.



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