There are generally three ways in which you can purchase property.
The first – the most common way – is by offer and acceptance of a signed Agreement for Sale and Purchase between the vendor (seller) and purchaser (buyer) of a property. The terms of the Agreement for Sale and Purchase can be negotiated between the parties, whether through a real estate agent or by a private sale. These types of agreements can contain conditions to enable the purchaser sufficient time to ensure they have completed their due diligence on the property and may include such matters as confirmation of finance being approved or obtaining a Land Information Memorandum (LIM) report to check what the council records show or a building report. Further terms may be added to the agreement such as obtaining a methamphetamine contamination report and anything else the purchaser may need to satisfy themselves that the property is suitable for their needs. This method gives the purchaser the ability to terminate the agreement if the conditions aren’t met.
The second method is by way of Tender. This is a less common way to purchase a property. In a tender situation the purchaser has one opportunity to make an offer and the vendor will look at all the offers presented to them and choose the one they like the best. A tender offer can be conditional on the same matters as a usual Agreement for Sale and Purchase but the more conditions, the less attractive the offer will be and the less likely the vendor will choose that particular offer.
The third method of purchasing is at auction. If you choose to buy at auction, you must complete your due diligence of the property before you go to auction as your auction offer must be unconditional. Once you purchase at auction you cannot get out of the agreement. Therefore all of the checks you would carry out in a usual Agreement for Sale and Purchase process need to be carried out prior to the auction.
Important steps to be aware of when purchasing by auction include:
- Register your interest with the real estate company before the auction.
- Have your solicitor review the Auction Agreement, Title documents and the LIM before the auction.
- Ensure you are aware of any warranties or guarantees the vendor has given or removed from the Auction Agreement.
- Have your deposit amount available at the auction (usually 10% of the purchase price) because if you are the successful purchaser, your deposit is payable immediately.
- Research the value of the property before you attend the auction to ensure you have an idea of its value and work out how much you are prepared to pay for the property.
- Once you have purchased at auction you are committed to completing the purchase.
- If the property doesn’t sell at auction, you may then be invited to enter into negotiations with the vendor.
It is recommended that you consult your solicitor before signing any Agreement for Sale and Purchase regardless of the method of sale to ensure your rights as a purchaser are protected. Please reach out if we can help.
