A Private Sale is where you negotiate a price face to face with the agent. Mortgage Broker Melbourne usually recommends an offer subject to finance because the valuer will scrutinise more closely the sale price due to the fact negotiations are normally a closed room deal. In an auction, all the bids are called out in public, at a private sale those bids are sealed so you could end up paying much more than the nearest bidder offered. Subject to finance then gives us time, usually 2 weeks to get a valuer through and have the bank accept that. You can also make a private sale subject to building and or pest inspections.
An Auction can be a more transparent way to buy a property because all interested parties are usually in attendance and the bids are called out in public. The result of an auction is final though, you can’t add conditions to your offer after the hammer has fallen so you need to do your due diligence prior to the auction day. You should obtain a copy of the Section 32 for scrutiny by your conveyancer. If you wish to get a building and or pest inspection, you must do so before auction day because the sale is unconditional, you can’t pull out later because you found a problem with the structure.
If you are the highest bidder but the agent tells you the reserve price has not been met, you will be invited in to negotiate further. Please note you still can’t add conditions to your offer and you need to be careful not to go too much higher than the highest bid because the valuer may think you have overpaid. If you do feel the need to go considerably higher, wait 4 full working days and you can add a subject to finance clause for your protection, in case the valuation comes back lower than the price you paid.
*Legal advice should be sought for your individual circumstances